More upside potential for USDJPY

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We come back to USDJPY after having caught the rally from 98 to 104. For some time now prices have been correcting after making a high at 105.43. The decline from the recent highs is a three wave pattern that implies it is part of wave 4. Now we believe that this wave 4 is most probably over because of two reasons. First, the rise from 96 seems incomplete. Secondly, prices have declined in three waves and reached the lower channel boundaries as a wave 4 should.

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We believe that the final 5th wave up is not complete yet and we should expect prices to reach 106-108 area. For this scenario to hold certain restrictions apply. First and most important is for prices not to fall below 102.80. Secondly we must see an upward impulsive move or an ending formation. Currently prices have made their first impulsive upward move from 102.80 to 104.88.

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It is very possible now to see a pull back after this 1st wave up. We should expect the 2nd wave of the final 5th wave to come between the 38% and 61.8% Fibonacci retracement. This pull back will provide the last opportunity to enter long with 102.80 as stop. Our target for the end of wave 5 is projected near 106-108.

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Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.