FX.co ★ EUR/JPY Wave Analysis for September 6, 2012

EUR/JPY Elliott Wave
For the last few weeks the EUR/JPY pair was trading in a sideways move (between 98.00 and 99.00 level), developing corrective (4) wave (coloured purple) of the bigger 3 wave (coloured blue). Yesterday during the Asian and European sessions we could observe a descending movement from 98.58 towards the 97.98 level and we can consider this move as the end of the (4) wave (coloured purple). Therefore, during the early New York session the EUR/JPY pair started pushing higher when the development of the (5) wave started. At the moment this currency is trading around 99.00 level and we are expecting to see the price around 100.200 soon. In accordance with our wave rules and taking into account that the wave 3 should retrace 161.8% of the wave 1, we can define the potential targets with Fibonacci extension (94.13-97.81-95.71), with Take Profit at 100.29 (161.8% of wave 1). To reduce the risk, we can use support at 98.50 level as Stop Loss. Also it is necessary to monitor the EU French 10-y Bond Auction, German Factory Orders m/m, Minimum Bid Rate, ECB Press Conference , ECB President Draghi Speaks and JPY BOJ Gov Shirakawa Speaks data that can change the rate of the pair.
Support and Resistance
(S3) 97.62 (S2) 97.98 (S1) 98.20 (PP) 98.55 (R1) 98.91 (R2) 99.13 (R3) 99.48
Trading Forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 99.05 with Stop Loss 98.50 and Take Profit at 100.29 are recommended.