Do not be fooled by the EURJPY rally back to 160. The larger trend is down, as evidenced by wave structure and the break of a 7+ year trendline. The decline should continue soon.
The NZDUSD has broken through a resisting trendline (drawn off of the 3/14 and 3/26 highs), therefore we are exiting the NZDUSD short (from .8049) and the AUDNZD (from 1.1221)
The weekly chart of the EURJPY shows that a 5 wave bull cycle from the October 2000 low at 88.94 ended in July 2007 at 168.94. Since July, a 3 wave correction has been underway. Waves A and B of that correction are complete and wave C is underway from the October 2007 high of 167.73. Wave C is expected to eventually enter the area of the former 4th wave (which coincides with the Fibonacci zone) that extends from 124.16-141.58. Also, in January, a 7+ year supporting trendline was broken; which supports the assertion that 168.98 is a major top.
Zooming in on the daily, we are treating the decline from 167.73 (top of wave B) to 151.71 as wave 1 of C. This decline has taken the form of a leading diagonal (waves i and iv overlap and wave i through v each consist of 3 waves). The sharp rise from 151.71 is considered wave 2. Second waves usually reverse near the former 4th wave and/or the 61.8% of wave 1. These levels are 161.40 and 161.55. The high yesterday was 161.71. While this is reason to suspect that 161.71 is the wave 2 high, a closer look reveals that the EURJPY will probably spike through 162 before plummeting in wave 3 of C.
In Elliott, form is most important. It is form that has us suspecting that larger wave 2 is not yet complete. Wave 2 has taken the form of a zigzag (a-b-c). Wave c would equal wave a at 162.67. More important though is that wave 5 of c is unfolding as an ending diagonal and one more high is required (above 161.71) in order for the pattern to be considered complete. 162.67 (waves a and c of the diagonal are equal) and 164.30 (78.6% of 167.73-151.71) are potential reversal points. Due to the larger bearish pattern remaining intact as long as price is below 167.73 and that this top may not form until next week, we will publish our specific entry at a later date at FXCMTR.
