FX.co ★ Elliott Wave Analysis of EUR/JPY for December 20, 2012

Today's Support and Resistance Levels:

S1: 110.91 R1: 111.93

S2: 110.40 R2: 112.49

S3: 110.14 R3: 113.47

Technical Overview:

After another speedy ride higher to 112.49 a new minor correction has been seen. This correction is likely already over, with its fall to 110.80, but we need a break above 111.93 to confirm that and give a new push towards 112.49 as the first minor target, followed by a continuation higher towards the 113.47 - 113.68 area. Here we will find the next target. Looking at the technical indicator, you can say, that this market is rather overbought and yes it is, but some of the biggest moves happen in very overbought territory. So we should not let ourselves be misled by overbought indicators. As there is risk that we are taken out and will have a difficult time getting into the market again. Traders are trying to pick the top and selling short in the most powerful part of the trend. Actually it is one of the things that keep feeding the trend. Short-term support is at 110.91 and important support is at 110.14. The later support should not be broken at any time, as that will tell us that a bigger correction is unfolding.

Trading Recommendation:

We are long EUR from 106.75 and will lift our stop to 110.05. If you are not long EUR already you can buy a break above 111.93 with the same stop.