FX.co ★ Elliott Wave Analysis of EUR/JPY for January 4, 2013

Today's Support and Resistance Levels:

S1: 114.09 R1: 114.44

S2: 113.77 R2: 114.78

S3: 113.44 R3: 115.22

Technical Overview:

With the clear break below 113.99 we have got confirmation that wave 4 is indeed developing. As a minimum target for this wave 4, we expect it to correct 23.6% of wave 3, which should take us down to 112.30, which is a common corrective target for an extended wave. However, for the short term we are looking for a small rally towards the 114.58 - 114.61 area as a b-wave and then a final c-wave down to 112.30 from where we will turn our focus towards the upside again. That said, we shall remember that 4 waves often is very complex in their structure, which easily could be the case here too. The possible complex structure for wave 4 is also the reason, why we normally do not like to trade them. However, we think it will be a low risk trade trying to short EUR near 114.58 for the move down to 112.30.

Trading Recommendation:

We will sell EUR at 114.55 with a stop at 115.30 and take profit at 112.55.