The clear break above resistance at 129.04 told us, that EUR/JPY is further along in its bullish cycle than we expected. Instead of wave i ending at 129.04, we have seen wave i peak at 127.72 and was followed by a zig-zag correction in wave ii between 50 - 61.8% of wave i. The ongoing wave iii has sub-divided into a series of smaller waves ones and twos, telling us that a substantial extension should be expected in wave iii. The 161.8% extension target of wave i is seen at 131.41.
Short-term, we could see a minor set-back to 129.12 before the next rally higher towards 131.41.
R3: 130.57
R2: 130.19
R1: 129.95
Pivot: 129.39
S1: 129.20
S2: 129.12
S3: 128.70
Trading recommendation:
Our stop at 129.25 was hit for a loss of 100 pips. We will buy EUR again at 129.15 or upon a break above 129.95.
