EURJPY rose heavily after the ECB ‘s policy statement on December 3rd. However, soon after that, the pair started declining again, reaching the lows near 131.02 today. Are we going to see all of the post-ECB gains erased or is this weakness only temporary? The chart below shows what the Elliott Wave Principle suggests EURJPY is most likely to do.
As visible, there is a five-wave impulse up to 134.58, followed by what appears to be a three-wave A-B-C zig-zag to the south. According to the theory, EURJPY ‘s trend points up. This means that the current sell-off is just a correction, which could always be expected to end near the 61.8% Fibonacci level. Even if it does not, as long as the invalidation level at 129.65 holds, the bulls should not give up, since the first targets stand above the top of wave 5 of the impulsive rally.
