FX.co ★ EUR/JPY Elliott Wave analysis for March 26, 2013

Today's support and resistance levels:

S1: 120.71 R1: 121.56

S2: 120.41 R2: 121.93

S3: 120.08 R3: 122.36

Technical overview:

The decline became slightly deeper than expected, but we have likely seen the bottom, or at least the price is very close to the final bottom of wave ii of 5 now. To confirm the bottom, we need support at 120.71 to protect the downside for a break above 121.56, which will be the first good indication that the bottom is in place for a rally higher towards 123.38. A break above it will confirm the bottom and the fact that wave iii of 5 is developing. However, if we break below 120.71 we must accept that one last new low is needed before wave ii of 5 is over. At no point do we see a break below the starting point of wave i at 118.73, if that was to happen our bullish count would be invalidated.

Trading recommendation:

We long EUR from 124.65 with a stop at 118.70. If you do not have long EUR positions yet, then buy at a break above 121.56 with the same stop.