FX.co ★ Elliott wave analysis of EUR/JPY for September 02, 2014

Today's support and resistance levels:

R3: 138.00

R2: 137.90

R1: 137.73

Current spot: 137.50

S1: 137.43

S2: 137.27

S3: 137.17

Technical summary:

The break above minor resistance at 137.29 has put the inverse S/H/S bottom into play. We still need a clear break above the neckline at 138.00 to trigger this bottom-formation, but if triggered we have a firm indication, that the bottom was found prematurely at 135.73. This premature bottom indicates underlying strength in this cross and a strong rally could be developing. We have been aware, that the decline from 145.69 was a correction and more upside was expected once this correction was over. So, even though this correction did not make it down to the ideal equality target at 134.34, this rally should come as no big surprise. Ideally we will see minor support near 137.43 to protect the downside for the test of the neckline resistance at 138.00.

Trading recommendation:

Our stop+reverse was triggered at 137.35. This gave us a nice little profit and positioned us for the expcted rally to 138.00 and likely above. We will place our new stop at 136.45. If you are not long in EUR yet, then buy EUR near 137.43 with the same stop at 136.45.