Trade Idea: EUR/JPY – Buy at 110.00
Friday, September 17, 2010
EUR/JPY – 111.73
Recent wave: wave v has possibly ended at 107.30
Trend: down
Original strategy :
Buy at 109.50, Target: 111.50, Stop: 108.80
New strategy :
Buy at 110.00, Target: 112.00, Stop: 109.40
As the currency pair has maintained a firm undertone after early rally caused by MOF’s intervention, adding credence to our view that the wave 5 has indeed ended at 105.44 earlier and upside bias remains for further gain to previous support at 112.00/10, however, reckon 112.47 (1.618 times projection of 105.44 to 109.56 measuring from 105.80) would hold due to near term overbought condition.
In view of this, we are looking to buy euro on pullback but at a higher level. Below 109.50/56 (previous resistance) would defer and risk retracement to 108.90/00 but reckon 108.25/30 would hold.
Our preferred count is that the decline from 139.26 is wave C and is sub-divided into (a): 127.00, (b) 138.49 and wave (c) has commenced from there with a diagonal wave 1 (i: 126.95, ii: 134.37, iii: 120.70, iv: 125.24 and then wave v at 119.66). The rebound from 119.66 to 127.95 was an a-b-c wave 2 and wave 3 is taking place from 127.95 with minor wave i at 122.37 and wave ii at 125.97 and minor wave iii has ended at 110.49 and wave iv ended at 122.29, wave v ended at 107.30 as the wave 3, wave 4 has ended at 114.74 and wave 5 has ended at 105.44.
On the bigger picture, we are treating the rally to 169.97 as end of wave A, then selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has commended from there with minor wave 1 ended at 119.66 and wave 2 at 127.95. This wave (C) of B should be limited to 105.00 and psychological support at 100.00 should remain intact.
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