EUR/JPY rallied nice into our wave iii/ target at 124.26 (it peaked at 124.43), with wave iii/ in place. It's now time for a correction in wave iv/. We already have a good idea how, this corretion will unfold and the reason for that is, the shape of wave ii/. Wave ii/ was a simple and deep zig-zag correction and the alternation principle tells us, that wave iv/ then should be small and only correct between 23.6% - 38.2% of wave iii/, which gives us a target area between 120.96 (38.2%) to 122.28 (23.6%). But because wave ii/ was simple, we also should expect wave iv/ to be complex in nature, making it hard to trade and the risk of getting stopped out of any trade is high.

R3: 124.70

R2: 124.43

R1: 124.00

Pivot: 123.51

S1: 123.23

S2: 122.68

S3: 122.28

Trading recommendation:

We sold EUR at 124.20 and we will move our stop lower to break-even and take profit at 122.35.