USD/JPY Elliott Wave Analysis

USD/JPY - 111.07

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

Although the greenback has rebounded after marginal fall to 108.82 last week and consolidation with mild upside bias is seen for test of resistance at 111.71, however, as this move is viewed as retracement of the fall from 114.39, reckon upside would be limited to 112.25-30 (61.8% Fibonacci retracement of 114.39-108.82) and bring retreat later. Below 110.35 would bring weakness to 110.00 but reckon downside would be limited to 109.50-60 and said support at 108.82 would continue to hold, bring another rebound later. 

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00. 

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the upside, whilst initial recovery to 111.71 resistance is likely, reckon upside would be limited to 112.25-30 (61.8% Fibonacci retracement of 114.39-108.82), bring another decline later. Above 112.50-60 would risk a stronger rebound to previous support at 113.12 but break there is needed to signal the fall from 114.39 has ended, risk further gain to 113.85-90, however, said resistance at 114.39 should remain intact, bring another decline later this month. 

Recommendation: Sell at 112.50 for 110.50 with stop above 113.50.

For intraday and daily ideas, visit trade ideas section.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.