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

Today's support and resistance levels:

R3: 130.86

R2: 130.48

R1: 130.28

Current Spot: 129.89

S1: 129.64

S2: 129.17

S3: 128.83

Technical overview:

On Friday we saw a failure to break below important support at 128.65. The failure caused a new rally, but this rally is most likely the part of wave ii of iii of A lower. However, to confirm this count, we need to see resistance at 130.28 to protect the upside for a break below support at 129.64. A break below 129.64 will confirm that wave c of the expanded flat wave ii is over and that wave iii of iii of A is developing. After an expanded flat wave ii we should always expect an extended wave iii, which in this case means a decline to at least 127.81 and possibly lower. That said, as long as support has not been broken, the risk is a break above 130.28, which will change our count slightly, but only to wave i down from 131.12 to 128.65 and wave ii will be ongoing towards 130.39 before down in wave iii.

Trading recommendation:

We are short EUR from 130.25 with a stop at 130.25 (break-even). If our stop is hit we will sell EUR again at 130.30 with a stop at 131.25. If you are not short EUR yet, then sell a break below 129.64 with the same stop at 130.25.