FX.co ★ EUR/JPY Elliott Wave analysis for January 22, 2013

Today's support and resistance levels:

S1: 119.63 R1: 120.24

S2: 119.22 R2: 120.71

S3: 118.81 R3: 121.28

Technical overview:

The wave IV correction from 120.71 should be over, and we are now looking for a rally past minor resistance at 120.24 to confirm that assumption for the last rally higher towards 120.71 and the ideal target near 121.28. That said, we should be aware, that the hole impulsive rally from 100.32 is coming to an end and a much bigger correction is looming. The coming wave 4 correction should at least give us a correction down to 113.54, which marks the bottom of the wave IV of a lessor degree. This is a very common target, and it will at the same time be very close to the 38.2% Fibonacci target. However, for now we should keep focus towards the upside for one last rally higher.

Trading recommendation:

We are long EUR from 119.41 with a stop at 118.15. Upon a break above 120.24 we will lift our stop higher to 118.75. We will take profit and reverse our long position to a short EUR position at 121.00.