USDJPY Attempting Multiyear Channel Breakout
|The USDJPY is most likely tracing one of two scenarios that eventually resolve to the downside. The black scenario tracks early wave action within a (C)-wave of intermediate degree. Odds increase for the black scenario if the breakout above the blue and green trend channels turns out to be a fake breakout within the next couple of weeks. The red scenario suggests an incomplete intermediate wave (B). It could trace a triangle (as depicted in red) or a double-three correction. Further extension within the orange trend channel shifts odds towards the red scenario.
All in all, we expect the general US dollar weakness to continue sooner or later. However, wave action looks incomplete to the upside short-term. Therefore, we assign higher odds that this is not a fake breakout but rather fades after some followthrough. Right now, the ball is in the bull’s court. It’s up to them how far they carry the current swing to the upside.
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