FX.co ★ Elliott wave analysis of EUR/JPY for July 31, 2014

Today's support and resistance levels:

R3: 138.11

R2: 138.05

R1: 137.85

Current spot: 137.77

S1: 137.56

S2: 137.25

S3: 136.98

Technical summary:

We saw a strong rally is USD/JPY, which of course also had its effects on this cross. The break above resistance at 137.25 told us, that red wave iv was not over yet and we should expect red wave iv to move closer to 138.05 before finally being over. At no point red wave iv should move above 138.11, which marks the bottom of red wave i. Besides, waves one and four should not overlap each other due to the Elliott Wave Principle.

We will look for a top of red wave iv at 138.05 for a break below support at 137.56. More importantly, a break below 137.25 calls for a decline to 135.49 to end wave iii. In a slightly longer term, we are still looking for a decline to 134.34 to end wave C of the correction from 145.69.

Trading receommendation:

Our stop at 137.30 was hit for a small loss. We will sell EUR agian at 138.00 or upon a break below 137.56 with a stop at 138.25.