Hello fellow traders. In this technical blog we’re going to take a quick look at the Elliott Wave charts of EURJPY , published in members area of the website. As our members know, we’ve been favoring the long side in EURJPY due to incomplete bullish sequences the pair is showing in the cycles from the June 2016 and May 2020 lows. Recently EURJPY made a pull back that has had a form of Elliott Wave Zig Zag pattern that has given us good trading opportunities. We expected EURJPY to find buyers at the extreme zone from the 04/21 peak. In the further text we are going to explain the Elliott Wave Pattern and trading strategy.
Before we take a look at the real market example, let’s explain Elliott Wave Zigzag.
Elliott Wave Zigzag is the most popular corrective pattern in Elliott Wave theory . It’s made of 3 swings which have 5-3-5 inner structure. Inner swings are labeled as A,B,C where A =5 waves, B=3 waves and C=5 waves. That means A and C can be either impulsive waves or diagonals. (Leading Diagonal in case of wave A or Ending in case of wave C) . Waves A and C must meet all conditions of being 5 wave structure, such as: having RSI divergency between wave subdivisions, ideal Fibonacci extensions and ideal retracements.
EURJPY Elliott Wave 4 Hour Chart 05.11.2022
Current view suggests EURJPY is doing black pull back against the 124.33 low. Decline from the peak looks like 5 waves structure, which means cycle from the peak is incomplete. Most likely we got only first leg of the pull back. Recovery against the 04/21 peak ended as truncated Zig Zag pattern – (B) blue. Current view suggests (C) leg is in progress toward 133.075-129.77 area ( Blue Box) .
We don’t recommend selling the pair against the main bullish trend. Strategy is waiting for the price to reached marked blue box zone, before buying the pair again. As the main trend is bullish we expect buyers to appear at the blue box for 3 waves bounce at least. Once bounce reaches 50 Fibs against the ((x)) black high, we will make long position risk free ( put SL at BE). Invalidation for the trade would be break of marked invalidation level 129.77.
As our members know, Blue Boxes are no enemy areas , giving us 85% chance to get a bounce.
You can learn more about Elliott Wave Patterns at our Free Elliott Wave Educational Web Page.
Eventually EURJPY made proposed leg down as we expected. The pair has found buyers at the Blue Box area and we are getting good reaction from there. Pull back completed at 132.621 low as a Zig Zag pattern. The rally from the blue box reached and exceeded 50 fibs against the (B) connector. Consequently, members who have taken the long trades at the blue box now enjoying profits in a risk free trades. Now we would need to see break of April 21st peak in order to confirm next leg up is in progress. Once the pair breaks 04/21 high, the pair will become bullish again in near term and might offer some new buying opportunities in the short term dips against the 132.621 low.
Note: Some labeling have been removed in order to protect clients’ privileges.
Keep in mind that market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site. Best instruments to trade are those having incomplete bullish or bearish swings sequences. We put them in Sequence Report and best among them are shown in the Live Trading Room
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