Trade Idea: EUR/JPY – Sell at 111.80

EUR/JPY – 109.55

Recent wave: wave v has possibly ended at 107.30

Trend: down

Original strategy :

Sell at 111.80, Target: 109.300, Stop: 112.40

New strategy :

Sell at 111.80, Target: 109.300, Stop: 112.40

As the single currency has finally rebounded after falling to 108.33 yesterday, suggesting the 2nd a leg of the abc-x-abc wave B has ended there and consolidation in 2nd be leg is unfolding with mild upside bias for recovery to 110.50/60, however, reckon this week's high of 111.90 would cap upside, bring another decline later. A break of said support would extend weakness towards 108.00 but reckon 107.50 would limit downside, bring wave C rebound later.

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.

In view of this, we are still looking to sell euro on recovery. Above 112.40/50 would signal the 2nd a leg has ended and bring rebound to 113.00 but 113.65/70 should limit upside, bring c leg decline later.

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 intac