FX.co ★ EUR/JPY Elliott Wave Analysis for December 28, 2012

Today's Support and Resistance Levels:

S1: 114.32 R1: 114.69

S2: 113.85 R2: 114.99

S3: 113.39 R3: 115.11

Technical Overview:

With the rally clearly above 113.76, we have adopted an even more bullish long-term count, as it can be seen in the chart above. This count "only" calls for a top in wave iii of 3 near the 114.99-115.11 area. Looking at the chart above, we can also see a negative divergence building in the EWO indicator, which tells us that the ongoing rally is loosing momentum and a correction should be seen soon. This correction should not be smaller than 199 pips and will likely decline towards 111.27, possibly even to 110.59, before the next rally towards 117.36.

Trading Recommendations:

We are long EUR from 106.75. Stop should be pulled higher to 113.35, take profit is at 114.90. We think it is time to protect the profit from this amazing rally from 105.28.