EUR/JPY is close to breaking through resistance at 124.87 for a continuation higher towards 126.46 as the next hurdle on the way higher to the former peak at 127.02. Ultimately the former higher at 127.02 should be broken too for a follow-through towards at least 129.24 and ideally closer to the 161.8 extension target of wave 1 at 135.46.
We also need to have a back-up plan if the rally from 122.34 is a leading diagonal. When we see a series of waves one's and two's in the beginning of a possible new impulsive trend, we need to consider the possibility of a leading diagonal building. If this is the case, then a break below support at 124.36 will indicate that a leading diagonal is a correct formation and a corrective decline to 123.91 and closer to 123.07 should be expected before the next strong rally higher in wave iii of 3/.
R3: 125.45
R2: 125.25
R1: 125.04
Pivot: 124.75
S1: 124.55
S2: 124.36
S3: 124.24
Trading recommendation:
We are long EUR from 123.10 and we will close 50% of our long position if support at 124.36 is broken and re-buy the 50% at 123.25 or upon a break above 124.87
