EURJPY—possible ABC correction

EURJPY has managed to stay above its low of 106.83, near a somewhat obscure fibo and near a round number (which the yen pairs seem to favor). On the daily chart (not shown), there was a harami candle yesterday which hints the market is vacillating. I'm still short from 109.27. I took partial profits at 160 pips just a few minutes ago.

The pair hasn't managed to get above 107.87 in what looks like an ABC correction on the three-hour chart. The A wave of this ran from 107.61 to 110.24 or 263 pips. From the 106.83 low, this means a target of 108.46 if C equals .618 of A, 109.46 if C equals A, and 111.09 if C is 1.618 A's length. I think 108.46 is most likely which is also near fibo confluence of 108.95. I'd probably re-establish a short position there as my profit stop would have been hit on my current short position. As I wrote yesterday, there's a cluster of resistance up to 109.00.

A support zone exists down to 106.24 (price lows, polarity, fib confluence). Below that is 105.83 (September lows) and 103.81.

Here's the three-hour chart:












© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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