FX.co ★ Elliott Wave analysis of EUR/JPY for February 21, 2013

Today's Support and Resistance levels:

S1: 123.62 R1: 124.16

S2: 122.89 R2: 124.60

S3: 122.26 R3: 124.90

Technical overview:

With the break below short-term important support at 124.54, now we should see downside pressure building for a new test of 122.89 on the way down to the first target at 121.26, which marks the 23.6% corrective target for wave 3. However, we think that a continuation down to the more normal correction target at 117.28, which marks the 38.2% correction target of wave 3, would be more likely. In the short term we expect that former support at 124.54, which now has turned into resistance, will protect the upside for the next decline towards 122.89. It is also worth noticing that we have broken below the channel, which has described the entire rally since 105.97.

Trading recommendation:

We are short EUR from 125.70 and will move our stop lower to 125.00. If you are not short EUR yet, then you should sell EUR on any rally back towards 124.54 with the same stop.