FX.co ★ EUR/JPY Elliott Wave Analysis for August 13 - 2012

EUR/JPY Daily

EUR/JPY 4 Hourly

Today's Support and Resistance Levels:

S1: 96.01 R1: 96.41

S2: 95.86 R2: 96.74

S3: 95.76 R3: 97.02

Technical Overview:
If we look at the larger picture first we could see that an important bottom is in place with 94.09 low and that we have started a new impulsive rally towards the 101.50 - 101.66 area as the first major resistance area.
Zooming in to the 4 hourly chart (the lower chart) we can see, that after the 94.09 low we have seen a nice five wave rally from 94.09 to 97.33 as wave 1 followed by a clear three wave zigzag correction down to 94.92, which corrected around 70.7% of wave 1. On the currency market we see quite often that the first waves are being corrected by 70.7%. From 94.92 we have seen a new impulsive rally, which we think is only the first wave of wave 3 which ideally will continue towards at least 100.24, where wave 3 will be 1.618 times longer than wave 1.
In a short term we expect that support at 95.72 will protect the downside, but only a break below strong support at 94.92 will invalidate our bullish view.

Trading Recommendation:
You should be long EUR against JPY from 95.85 with a 94.95 stop. Upon a break above 97.28, move stop up to 95.70.