6 March EURJPY Elliott Wave Setup: Buy The Dip?


The following is an update to our long term view on EURJPY. We had earlier considered a bearish stand but with the way price reacted, there is need for a review. Will buying the dip be good based on 6 March EURJPY Elliott wave setup?

06 March, AtoZForex – In the last update, we forecast an impulse wave downside. The impulse wave completed the 4th wave with a good corrective pattern. It would be a good opportunity to dig as price broke out of a congestion. The chart below was used in the last update.

EURJPY Elliott wave analysis Weekly EURJPY Elliott wave analysis (click to zoom)

The chart above was a very classic wave pattern projection. The wave IV was also a real classic corrective pattern. The R/R ratio is also very good as price was expected to go as low as 92.

EURJPY Elliott wave analysis Hourly EURJPY Elliott wave analysis (click to zoom)

Price left the congestion level and our expectation was for a motive wave V with sub-wave 1 and 2 completed. What happened next?. Did price go as expected?

6 March EURJPY Elliott wave setup EURJPY Elliott wave analysis, H12 (click to zoom)

The resulting move is corrective and that gives a clue to more bullish move. The Elliott wave theory gives an ‘exit strategy’ when an expectation is not met. A double zigzag pattern has just completed and more rally is expected. This is an opportunity to exit the bearish bias and embrace the bullish sentiment.

6 March EURJPY Elliott wave setup: buy the dip?

How can a swing trader join the bullish move after the price reacted to the double zigzag. The best bet now is to wait for a dip and buy it. The chart below explains more.

6 March EURJPY Elliott wave setup EURJPY Elliott wave analysis, H4 (click to zoom)

Buying at 50% retracement of the recent rally wouldn’t be a bad idea. If price dips to 119.635 ( a good buying price) and bounces off, there is a potential of an inverted head and shoulder pattern. Head and Shoulder patterns are reversal patterns. A rally above 124 is very likely. With a potentially large R/R, this should be a good investment.

Do you have other views in contrast to the ones listed or you want to compliment them further? let’s know by your comment below.

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