EUR/JPY failed to move below 120.75 and instead broke above minor resistance at 121.97 indicating a low. This means that that the decline from 123.18 most likely was the c-leg of an expanded flat correction as wave ii and wave iii could now be developing. We still need a break above the 123.18 peak to confirm that the wave iii is developing but if such break is seen, we should look for a strong impulsive rally in wave iii that ultimately should take us above 127.50.

Support is now seen at 120.92.

R3: 123.75

R2: 123.18

R1: 122.45

Pivot: 121.85

S1: 121.64

S2: 120.92

S3: 120.75

Trading recommendation:

We are long EUR from 121.98 with our stop placed at 120.85.