FX.co ★ Elliott wave analysis of EUR/JPY for October 20, 2016

Wave summary:

As we said yesterday, the failure to break above resistance at 115.05 posed a risk to produce a deeper correction closer to 113.00 and that's exactly what we have seen as a test of 113.10 as the low has been seen. This correction could be enough for a new rally higher to 115.05 and 116.28 on the way higher to 122.00. The first good indication that the correction from 116.28 has completed will be a break above minor resistance at 114.16, while a break above 115.05 will confirm that the correction is complete and a new strong test of resistance at 116.28 is developing and above this resistance calls for 122.00 and above. From a classical technical point of view an Inverse S/H/S bottom could be building, with the neckline resistance seen near 116.28.

Trading recommendation:

We will buy a break above 114.16 with stop placed at 113.05.