USDJPY – Appears to be in a wedge formation

USDJPY

USDJPY had been in a corrective wave (4) from its Nov’11 low at 75.55.  Given an ABC wave completion at 84.20, odds favors a retest of the strong 76.00/75.55 support. A break there would signal a fifth wave targeting 75 and below.  The 80.60/ 81.80 resistance needs to be cleared to shift the focus back on 83.30/84.20.

The recovery from 77.10, with a weekly bullish hammer candle, could not break the trend line resistance line at 79.25.  The pattern from swing high at 80.60 may be considered as a wedge formation (Diagonal fifth wave in Elliot terms). Immediate term resistance is at 78.40/78.90 ahead of 79.25 which should remain tough in the near term. A move below 77.40 would aim for 77.10/76.60 next (watch the wedge support line) where look for a stabilisation attempt. A break below however extends the bear run toward the 76.00/75.60 support. Bulls need to clear 79.25 to extend the recovery toward 79.70/80.60.