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I've posted this view on USD/JPY in the Technical Analysis Contest and I thought to share it here as well, you can find the original post here: USD/JPY Elliott Wave Cycle Completed
Based on the Elliott Wave cycle the bullish trend that started in 2012 in USD/JPY as completed a 5 wave move(see Figure 1) and in this regard now we can expect some type of correction. This bullish move was quite straight forward without much correction only a shallow correction in wave IV. Now that we have completed a 5 wave move Elliott Wave suggest we should expect an ABC correction but this should push us back all the way towards the levels of wave 4 which will be quite a big downside move. But I doubt we're going to get down there because of the broad based dollar strength I think we're only going to get as close as 115.50 current support level. (see Figure 2).
In Figure 2 we can have a closer look at the recent price action and how we're in a wide range zone of a mere 650 pips. WE have 3 important level to watch here:
The only reason why I'm not expecting a strong and a deep pull-back is because of the fundamentals which are pointing towards a massive policy divergence between the FED which is moving towards rates normalization and BOJ which is still further easing.Only a shift towards risk aversion could trigger save haven status of the yen and than we can see broad based dollar strength and also stronger yen. We could have a risk off environment if riskier assets like the equity market produces a sell off.
Based on Elliott Wave forecast and my projections we should see an exchange rate for USD/JPY of 118.11 for 2nd of February.
Best Regards,
Daytrader21
Based on the Elliott Wave cycle the bullish trend that started in 2012 in USD/JPY as completed a 5 wave move(see Figure 1) and in this regard now we can expect some type of correction. This bullish move was quite straight forward without much correction only a shallow correction in wave IV. Now that we have completed a 5 wave move Elliott Wave suggest we should expect an ABC correction but this should push us back all the way towards the levels of wave 4 which will be quite a big downside move. But I doubt we're going to get down there because of the broad based dollar strength I think we're only going to get as close as 115.50 current support level. (see Figure 2).
Figure 1. USD/JPY Weekly Chart. Elliott Wave count.
In Figure 2 we can have a closer look at the recent price action and how we're in a wide range zone of a mere 650 pips. WE have 3 important level to watch here:
- 122.00 swing high level and multi-year high;
- 119.00 middle of current range;
- 115.50 Strong support level ahead of 115.00 psychological number;
Figure 2. USD/JPY 4H Chart.
The only reason why I'm not expecting a strong and a deep pull-back is because of the fundamentals which are pointing towards a massive policy divergence between the FED which is moving towards rates normalization and BOJ which is still further easing.Only a shift towards risk aversion could trigger save haven status of the yen and than we can see broad based dollar strength and also stronger yen. We could have a risk off environment if riskier assets like the equity market produces a sell off.
Based on Elliott Wave forecast and my projections we should see an exchange rate for USD/JPY of 118.11 for 2nd of February.
Best Regards,
Daytrader21
