FX.co ★ Elliott Wave Analysis of EUR/JPY for April 23, 2013

Today's Support and Resistance levels:

S1: 128.55 R1: 129.15

S2: 128.05 R2: 129.50

S3: 127.67 R3: 129.99

Technical overview:

The break below support at 128.78 once again increases the odds for a top being in place already at 131.12. However, we need a break below 126.43 to confirm that the rally from 124.87 only was in three waves and therefore is just a correction. This tug of war between the bulls and bears will soon find its winner. If the bulls win, we still need one last rally above the former high at 131.12, but the possible upside should be very limited. If the bears win, we will see a break below 126.43 and a downside acceleration is likely to take place as long positions are closed quickly. No matter if the bulls or bears win this tug of war, we have a complete five wave rally of the 94.10 low to the high of 131.12. Even if we do see above the last high, we should be very close to the top and wait for wave (2) to take over. Wave (2) should at least take us down to the bottom of wave 4 at 118.73, but the decline in wave (2) could be deeper.

Trading recommendation:

We go short on the EUR from 128.70 and place our stop at 130.00.