Guest Commentary: 7-Swing Elliott Structure in EUR/JPY
According to modern Elliott Wave theory, simply counting the waves is just the beginning. In addition, traders must also count the sequence of swings in order to determine the proper path of price. This is evident when studying the one-hour price action in EURJPY, which is now declining from the April 29 peak of 142.47.
The decline from that April 29 high can be sub-divided into seven swings, where the drop to 139.84 completed wave A and the recovery to 140.94 completed wave B.
Currently, the pair is getting close to the C = A target at 138.29, with a (1.236 x A) classic Fibonacci extention just below at 137.66. This 137.66 - 138.29 area is where we expect the corrective structure to complete and the pair to turn higher.
From this zone, EURJPY could be primed for new highs above 142.47, or could put in three waves higher to reach the previous B wave area. As a result, we don't like selling the pair at this time and instead favor buying dips as part of the pullback to the upside.
By Eric Morera of Elliottwave-Forecast.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.