FX.co ★ EUR/JPY Elliott Wave analysis for February 20, 2013

Today's support and resistance levels:

S1: 125.18 R1: 125.49

S2: 124.59 R2: 125.90

S3: 124.04 R3: 126.48

Technical overview:

Important short-term support at 124.54 protected the downside for a new move higher to 125.90, but it should be a question of time before support at 124.54 is broken and the downside pressure is building for a new decline towards 122.89 and lower towards 121.26 and finally the ideal wave 4 target at 117.28. In the short-term we expect resistance at 125.49 for a break below 124.90, which will confirm the next attach on important support at 124.54. Ideally, resistance at 125.90 will protect the upside for now, but only a break above 126.95 will invalidate our count and call for a new rally back towards 127.70 and higher.

Trading recommendation:

We short EUR from 125.70 with stop at 125.95. If you have not had short positions on EUR yet, then sell at 125.45 or a break below 124.90 (one order cancels the other) with the same stop.