Guest Commentary: EUR/JPY to do a 1000-pip Round Trip on a Blow Out?!
* Given the maturity of the uptrend from 100.35, we expect volatility to increase significantly.
* We are therefore now trading EURJPY from both sides as it sets an up aggressive blow out and then a reversal.
Since Euro Yen spiked 120 our view that the uptrend was overdone in the near term was validated by the 5 wave decline to 116.50. However, the fact it then went to a new high suggested a correction that would (if it repeated itself) need another 5 wave decline to retest but hold the previous low before another new high potentially twice the size of the consolidation.
So having…retested the 116.50-117 low and daily trend support the recent break of 118.25 is analogous to the previous break of 114.70 and therefore should now hold as it crucially maintains momentum to and beyond 120.70 in the next 48 hours to the outstanding 123.30 target typically in Asia early Monday.
So we are long and adding on dips looking to cover and sell this blowout for an eventual break back below 120.70 118.25 to threaten even the pivotal 116.00-50 support.
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