Medium term
Trade view / 22 September 2016 at 7:58 GMT

Looking for a higher correction in EURJPY

Analyst / PIA First
United Kingdom
Instrument: EURJPY
Price target:
Market price:

USD Index: The US dollar is on the back foot after another Federal Open Market Committee meeting with "a lot of air and no action". Expect intraday volatility as we hold inside the ascending triangle formation. 

I think it will be sometime until we see any sustained trends (in the USD). Resistance is at 95.52, support at 94.70. 

USD Index
Source: Saxo Bank

We have to be mildly more bearish than bullish on the USD in the days ahead. Various national bank speakers going into the end of the week but little in the way of economic data...

The selloff in EURJPY has stalled and is correcting higher this morning. A higher correction offers an opportunity to get short with a good risk/reward ratio (sell into rallies). 

Monthly: A sustained period of consolidation as we hold close to the Fibonacci confluence area (115.36-111.51). Because of the speed of the decline over the last 16 months (over 22%), we look for this to be a mere fourth wave consolidation before the next selloff.  

EURJPY M Source: Saxo Bank 

Weekly: We have rejected gains close to the 23.6% pullback level of 116.65. This is common for fourth waves (Elliott Wave). 

EURJPY W Source: Saxo Bank 

Daily: Highlights the cross breaking the triangle formation to the downside. We have now stalled close to the previous low of 112.46 (August 4). Yesterday we posted a bearish Outside Day.

Although this formation is stronger at the top of the trend, it does highlight investors’ enthusiasm to sell rallies. 

Source: Saxo Bank

Four-hour chart: We have stalled at the 161.8% extension level of 112.24 (from 116.36-113.81). The move higher is regarded as a fourth wave correction (Elliott Wave).

EURJPY 4 Source: Saxo Bank

One-hour chart: The pullback levels for fourth waves are normally 23.6% and 38.2% and these are located at 113.00 and 113.60. With a barrage of bespoke resistance at 113.00, we look to the first level to get short. It should be noted that this is a medium-term trade. 

Source: Saxo Bank

Management and risk description

Risk/reward at 4.7/1.


Entry: 113.00.

Stop: 113.70.

Target: 109.70.

Time horizon: first week of October.

— Edited by Michael McKenna

For more on forex click here.

Non-independent investment research disclaimer applies. Read more
AlexF AlexF
Working so far took short at 113.36


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail