The decline from 124.43 has reached a new low at 119.31. The deeper than expected corrective drop from 124.43 has once again forced us to review our count from wave (E) at 114.40. The rally from 114.40 to 124.43 can be counted as a complete impulsive rally (five waves). This rally does fulfill all requirements, so we have decided that this count now is our preferred count. Under this count, the correction in wave 2 now has met the 50% corrective target at 119.41, and at the same time, we see a clear positive divergence from the RSI indicating a possible low now can be in place. If this is the case, then EUR/JPY may break above minor resistance at 120.21 soon.
This, however also means, that as long as minor resistance at 120.21 is able to cap the upside, the risk remains lower, but the positive divergence will work in our favor and limit the potential downside.
R3: 121.23
R2: 120.53
R1: 120.21
Pivot: 119.70
S1: 119.31
S2: 119.10
S3: 118.91
Trading recommendation:
We are long EUR from 119.95 and we will keep our stop at 118.95
