FX.co ★ EUR/JPY Elliott Wave Analysis for August 27 - 2012

Today's Support and Resistance Levels:
S1: 98.36 R1: 98.83
S2: 98.19 R2: 99.18
S3: 97.80 R3: 99.59

Technical Overview:
Odds favor that the correction in red wave 4 ended at 97.97 and we expect to see a break above minor resistance at 98.82 soon for a rally higher towards the first red wave 5with the target at 99.59 (T6). At 99.59 red wave 5 will make 38.2 of the distance traveled from the start of red wave 1 to the top of red wave 3. If the first target at 99.59 is broken, we would look for a move towards 100.60, which is where red wave 5 will be 61.8 of the distance traveled from the bottom of red wave 1 to the top of red wave 3. These two targets are the most common targets for wave five in an impulsive move.
In a short term, a move below the top of red wave 1 at 97.80 would not be allowed before we have a new top in place above 99.18. Any break below 97.80 before a new top will violate one of the three rules of the Elliott Wave Principle rule that an overlap between wave one and wave 4 is not allowed.

Trading Recommendation:
You should be long EUR against JPY from 95.85 with a 97.75 stop, which will leave you with a profit of at least 190 pips no matter what happens. If you are not long EUR already, you could buy EUR upon a break above 98.82 (buy at 98.90) with a stop at 97.97 and take half profit at 99.50 and half profit at 100.50.