FX.co ★ EUR/JPY Elliott Wave analysis for March 8, 2013

Today's support and resistance levels:

S1: 124.60 R1: 125.00

S2: 124.19 R2: 125.22

S3: 123.85 R3: 125.89

Technical overview:

Yesterday's rally was much more impressive than we expected. The break past resistance at 122.75 was a warning that we should expect more upside, but is our call for one last decline towards 117.28 dead? No, not yet. It will take a break above 125.89 to confirm that wave 4 ended already at 118.73 in a double zigzag. What we do not like about this rally is the very start of it. It was messy with lots of overlaps and even a minor triangle can be seen and that is not what we expect at the beginning of an impulse rally like wave 5. Therefore, as long as resistance at 125.89 protects the upside we will be looking for a new decline and a break below 124.19 will be the first indication that the x wave has peaked. That said, a break above 125.22 will invalidate the possible x wave and indicate that wave 5 is indeed developing for a rally towards 127.70 and higher towards 131.38 as the first possible target for wave 5.

Trading recommendation:

Our stop at 123.95 was hit. However, we regard the current levels as a low risk selling opportunity and will be here at 124.81 with a stop at 125.95.