06.01.201610:27 Forex Analysis & Reviews: Elliott wave analysis of EUR/JPY for January 6, 2016

Long-term review

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Wave summary:

We have seen the expected downside acceleration as wave (iii) lowered towards the expected target near 116.13. We were looking for a minor sideways consolidation near minor support at 128.03, but there was no support to be found here and it is typical behavior of wave (iii). Corrections during a third wave tend to be small or even sub-normal. When this occurs, I stay focused on longer-term targets and try not to get caught in possible minor targets.

In the short term, we have seen the 200% target of red wave (i) tested at 127.18, which could cause a bounce back to 128.04, but the downtrend looks strong and could easily take out this support too for a decline closer to 125.45 as the next minor downside target.

Trading recommendation:

We are short EUR from 130.95 and will move our stop lower to 129.50. If you are not short EUR yet, then sell near 128.00 and use the same stop at 129.50.

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