FX.co ★ Elliott Wave Analysis of EUR/JPY for December 27, 2012

Today's Support and Resistance Levels:

S1: 113.37 R1: 113.76

S2: 113.02 R2: 114.17

S3: 112.58 R3: 114.73

Technical Overview:

As it is usual for wave 3, there was no time for a correction, and the rally just kept moving higher towards the next target at 113.76. We could potentially be near the top of the wave 3 but need a break below 113.02 and more importantly below 112.00 to confirm that wave 3 is over. As long as support at 113.02 has not been broken, the uptrend in wave 3 is intact, and a test of 113.76 should be seen with potential for a move even higher towards 114.17 and 114.73. That said, this move is clearly becoming stretched and we should expect a relatively big correction soon.

Trading Recommendation:

We are long EUR from 106.75 and will lift our stop higher to 112.85. As we are likely close to the end of wave 3, it is time to protect the profits made on this spectacular rally we have seen since 105.97.