FX.co ★ EUR/JPY Elliott Wave analysis for February 25, 2013

Today's support and resistance levels:

S1: 123.62 R1: 124.20

S2: 123.04 R2: 124.55

S3: 122.55 R3: 124.80

Technical overview:

There should be no doubt in anybody's mind that the decline from the 127.70 high is corrective. The structure is overlapping, it is slow and it is confined within the boarders of the channel. That said, we are still missing wave c down in the second zig-zag correction, therefore we are looking for one last decline down to at least 121.26, where wave 4 will have corrected 23.6% of wave 3. However, a more adequate corrective target would be at 117.28, where wave 4 will have corrected 38.2% of wave 3. In the short term, we are expecting minor support near 123.62 for a minor rally towards 124.57 and maybe even towards 124.82 before the next powerful decline to below 123.07 and, more importantly, below 122.55 confirming the decline towards 121.26.

Trading recommendation:

As we began the day with a gap to 125.00, our stop at 124.75 was first filled at 125.02, but it still left us with a nice profit. We are looking for a new EUR selling opportunity, and will sell EUR at 124.45 with a stop at 125.95.