Executive Summary:
- USDJPY is rallying in wave ((ii))
- A top is anticipated between now and 152
- When the new downtrend develops, it would reach 130
Elliott Wave Pattern on USDJPY
USDJPY has largely been trading sideways since early August. However, this sideways range may break soon.
Our Peak to Plunge forecast on August 22 offered two paths that we were following for USDJPY.
Let’s follow up on one of those paths, the red path.
On August 22, we stated:
Due to the brief rally in both price and time, the second Elliott wave model we are following (red labels) is that last week’s high was simply wave (a) of a larger (a)-(b)-(c) rally. This means wave (b) is over or nearly over and wave (c) would carry higher up to 149.50-154 to complete wave ((ii)).
On Monday, USDJPY reached a high of 149.98, right inside the target zone.
It is possible to count the minimum waves in place for USDJPY to top. However, there may be a couple more subdivisions higher to carry deeper into the target zone.
You see, we are considering the current wave count to be wave (c of ((ii)) where wave ((ii)) is an upward flat.
Within the c-wave of a flat we are anticipating a 5-wave impulse to develop. Four of those waves appear in place with wave iv listed as a symmetrical triangle. This means a little higher movement is anticipated in a fifth and final wave.
In fact, we’ve refined the target zone to be 151.55-152. This doesn’t mean that USDJPY has to carry up to this level. If USDJPY continues to rally, be on alert for a major bearish reversal appearing between now and about 152.
If this wave labelling is correct, then if USDJPY turns lower, it could trend down to reach 130.
Bottom Line
USDJPY is getting close to a bearish reversal after shaping an upward (a)-(b)-(c) expanded flat pattern from early August.
This upward flat is scheduled as wave ((ii)) and when it terminates, then wave ((iii)) would commence to the downside. Wave ((iii)) is anticipated to be a strong wave possibly carrying down to 130.
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