FX.co ★ Elliott Wave analysis of EUR/JPY for August 2, 2013

Today's Support and Resistance levels:

R3: 132.07

R2: 131.82

R1: 131.53

Current spot: 131.37

S1: 131.12

S2: 130.79

S3: 130.40

Technical summary:

We have seen the expected rally higher in a complex correction in blue wave ii. The correction went a little higher than we expected, as we have seen a high at 131.56. However, we should soon begin to see renewed downside pressure for a break below support at 131.12 and, more importantly, a break below support at 130.79, which confirms that blue wave ii is over and blue wave iii lower has taken over for a decline towards at least 1.2607 and maybe even lower. In the long term we are looking for a decline towards very strong support at 124.96 and if this support breaks we will be looking for a continuation lower towards 118.73.

Trading recommendation:

We are short EUR from 129.55 with a stop at 132.80 expecting to lower the stop soon. If you are not short EUR already you can sell here at 131.37 or wait for a break below 130.79 as confirmation that blue wave ii is over. Stop should be placed at 132.80 too.