Short term analysis of EUR/JPY using the Elliott Wave theory suggests that the recent rally from the low on December 7, 2023 is unfolding in a 5-wave pattern. The initial wave 1 peaked at 163.71, followed by a pullback in wave 2 to 160.21. The pair then surged higher in wave 3, reaching 171.58. Currently, wave 4 is underway, characterized by a zigzag pattern.
Within wave 4, sub-waves (i) and (ii) have already completed, with (i) ending at 170.41 and (ii) at 171. The subsequent decline in wave (iii) took the pair to 166.31 before a rally in wave (iv) pushed it up to 168.55. The final leg of wave (v) ended at 165.6, marking the completion of wave ((a)) at a higher degree. This was followed by a corrective bounce in wave ((b)) with a zigzag pattern in a lower degree.
Moving forward, the pair is expected to continue lower as long as the pivot at 168.68 remains intact. The potential target for this downward movement is between 159 and 162.7, derived from the 100% – 161.8% Fibonacci extension of wave ((a)), where support levels may be found.
The accompanying 60-minute Elliott Wave chart illustrates the recent price action of EUR/JPY, while a video further explains the Elliott Wave analysis for the currency pair.