FX.co ★ EUR/JPY - Elliott Wave Analysis for October 22, 2012

Today's Support and Resistance Levels:

S1: 103.38 R1: 103.80

S2: 103.14 R2: 104.19

S3: 102.95 R3: 104.71

Technical Overview:

It seems likely that we have seen a small wave iv of 5 end at 103.14 and now it should be headed towards the ideal target at 104.71 (where the blue arrow is located). Ideally, we will see 104.71 tests later today. Once we have seen a test of the ideal target at 104.71 we expect a top to be formed and the largest correction started since the 94.10 low. Saying largest correction we mean both price and time, which means the correction will be larger than 422 pips and it will take more than a month to develop. However, now we should concentrate on this last rally higher towards our target at 104.71. We think we have had the first good indications that we are on our way towards the target, but we would like to see a break above 103.80 to confirm wave v of 5 has indeed begun.

Trade Recommendation:

You should be long EUR from 102.85. Lift your stop to 103.10 and take profit and reverse your position to a sold EUR position at 104.50.