Trade Idea: EUR/JPY — Buy Again At 134.70

EUR/JPY - 135.00

Recent wave: wave 1 of C rally from 112.08 (21 Jan 2009) formed a temporary top at 139.26 (5 May)

Trend: Up

Our trading strategy: Buy again at 134.70, Target: 135.70, Stop-loss: 134.20

(Yesterday's recommended trade: Hold long entered at 133.70, Target met at 135.20)

Despite euro's brief drop to 133.36/40 yesterday, subsequent rally to as high as 135.90/94 (penetrated indicated previous support at 135.70) today has justified our view that the correction from the temporary top of 139.26 has ended at 131.41 last week and consolidation with upside bias would be seen for further gain to 136.00 and possibly 138.30/35 later this week where a break there would encourage for re-test of 139.26 in July, above will confirm wave v of 1 has resumed and extend gain to 141.03 (50% Fibonacci retracement of 169.97-112.08) in Q3.

In view current bullish outlook, we will buy EUR/JPY again on dips with 50 points stop and only a breach of yesterday's low of 133.36/40 would prolong the choppy trading inside 131.47-139.26 broad range and weakness to near term support at 132.95/00 cannot be ruled out, however, 131.41/47 support area is expected to remain intact.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 was ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c type of correction in wave B. The subsequent rally from 112.08 showed impulsive structure, therefore, we labeled it as wave 1 of C. On the downside, only a daily close below 131.41/47 will signal wave v of 1 has possibly ended, bring wave 2 correction to 129.70 and possibly towards 126.99 (18 May 2009), however, 124.38 support should remain intact.

Based on ActionForex.com Technical Outlook