Tuesday, December 11, 2012
Elliott Wave analysis of EUR/JPY and EUR/NZD
We saw a new low at 105.98 yesterday followed by a rally to resistance near 106.67 (The high was at 106.73). This rally could well be the start of wave iii of 3 higher. If this is the case we should see a minor correction towards the 106.26 - 106-35 area from where the next rally higher should break above 106.73 without much trouble, for a continuation higher towards 107.98 and much higher longer term. The risk is of cause a break below 105.98 that will tell us, that a deeper correction towards 105.28 is need before wave iii of 3 is ready to take off. Event though correction in wave 3 tend to be small and even sub-normal, they can develop into something more complex only time will show.
We have seen a small rally since the 1.5463 low to 1.5526, but we need a break above minor resistance at 1.5543 and more importantly 1.5602 before we feel more confident, that wave ii is over and a new powerful rally is developing. As long as resistance at 1.5543 protects the upside we must allow for a deeper correction closer to the invalidation point at 1.5390, but at no point can we go below, as that would tilt the picture towards a more bearish count. That said, I don't expect the all important support at 1.5390 to yield at any time and is more focused on a break above 1.5543 and 1.5602 for a rally higher towards 1.5927 as the first major resistance.