FX.co ★ Elliott Wave Analysis of EUR/JPY for January 8, 2013

Today's Support and Resistance Levels:

S1: 114.69 R1: 115.22

S2: 114.47 R2: 115.55

S3: 114.10 R3: 115.96

Technical Overview:

It is still an open question whether a flat correction or a triangle is developing. Just looking at the chart the triangle possibility looks more convincing, but it would not take much to alter that outlook back towards the flat concept. So what do we do? We will hang on to the flat correction concept for now, but protecting will be tight. A failure to break below 114.10, followed by a break above 115.22, and, more importantly, a break above 115.55 will confirm the triangle scenario. Meanwhile, a break below 114.10 and, more importantly, a break below 113.65 will confirm that the flat correction for a decline down to at least 113.24 before this correction is over and a new rally above 116.00 will be seen.

Trading Recommendation:

We are short EUR from 114.75 and will place a stop + reverse at 115.60. (Go from a short position in EUR to a bought position.) Take profit is at 113.35.