FX.co ★ EUR/JPY Elliott Wave Analysis for August 20 - 2012

EUR/JPY - Daily

EUR/JPY 4 Hourly

Today's Support and Resistance Levels:

S1: 97.75 R1: 98.18

S2: 97.57 R2: 98.38

S3: 97.43 R3: 99.42

Technical Overview:
Looking at the larger picture we expect that a major long term bottom is in place with the test of 94.09 and that a new long term uptrend has begun. The first major upside target is near 101.63 which marked wave 4 in the decline from 111.43. A break above 101.63 will be the first good long term indication that a long term bottom is in place at 94.09.
Zooming in on the rally since 94.09 low, we have two possible scenarios. The first, which is shown above, is that we have seen a series of wave one's and two's and should soon see a break above 98.68 for a move towards 99.42. However, if resistance at 98.68 protects the upside for a break below 97.47, the best fit will be in case there is leading diagonal like wave 1 and we should see wave 2 towards support in the 95.35 - 95.75 area before the next dynamic rally can be expected.
As for now, the favorite scenario is the one shown, but a break below support at 97.47 will shift the favor towards the leading diagonal view.

Trading Recommendation:
You should be long EUR against JPY from 95.85 and lift your stop to 97.45 leaving you with a nice profit no matter which scenario is the correct one.