FX.co ★ Elliott wave analysis of EUR/JPY for February 11, 2016

Wave summary:

EUR/JPY failed to hold support at 128.25 yesterday and that posed a threat of moving closer to important support at 126.14, which has to protect the downside. A larger count indicates that wave [2] still is unfolding.

Therefore, we will watch the weekly chart today to gain perspective. My preferred count suggests that an orthodox top was seen with a test at 145.69 in late December 2013 and everything until a low of 126.05 was a part of an expanding flat correction.

The rally from the low of 126.05 to 141.04 was 1 and the decline to 126.14 was a very deep wave 2. Wave 3 is ideally in its infancy.

If however support at 126.14 gets broken, this count will be invalidated and calls for more downside pressure towards 119.90 in wave [2].

Trading recommendation:

We will buy EUR at 126.80 or upon a breakout above 127.65 with stop+revers placed at 126.10.