Elliott wave analysis of EUR/JPY for August 22, 2018

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EUR/JPY has rallied to a high of 128.06 or 12 small pips above our ideal target at 127.94, but staying below important resistance at 128.48 our slightly preferred count calls for a final dip in wave v/ to complete wave C of II. Normally two of the waves, in a five wave sequence, are equal in length and one wave is extended. In this case wave iii/ clearly is extended, calling for wave v/ to be equal in length to wave i/ and that will leave us a target at 125.43, which is above the low of wave iii/. This is a possibility under the EWP, but a possible failure should never be anticipated in advance, so we need to assume, that wave v/ will dip below the end of wave iii/. The next likely target for wave v/ is seen at 124.62 or just above the start of wave I, this possibility will keep all requirements under the EWP in line, so that will be our assumption. That said, we also need to stress, that wave II is running out of time fast. So any break above 128.48 or a failure to make the expected dip before August 30, will shift the preferred count in favor of a low of wave C at 124.89 and wave III developing already.

R3: 129.48

R2: 129.00

S3: 128.06

Pivot: 127.33

S1: 126.83

S2: 126.05

S3: 125.68

Trading recommendation:

We sold half of our long position at 127.40 for a nice 115 pips profit. We are now 50% long from 126.25 and we will move our stop higher to 126.80 and if done, we will re-buy EUR at 124.75.

The material has been provided by InstaForex Company - www.instaforex.com