USD/JPY Elliott Wave: Back at Intervention Levels

Executive Summary

• USDJPY reached levels that previously produced intervention by BOJ.
  
• Two Elliott wave models we are following call for a setback in prices to 157 and possibly lower.
  
• A break above 163.99 voids the wave count noted below.
  

Earlier this week, the Bank of Japan held increased its overnight interest rate to 1.00%. The USDJPY didn’t seem to flinch much.

However, when stepping back at the longer-term pattern, the inability to break 162 hints at the termination of a larger pattern.

Current Elliott Wave Analysis

The daily USDJPY price chart going back to 2024 points to an ending Elliott wave pattern.

A large wave ‘B’ triangle carved from the October 2022 high to the April 2025 low. This means the rally since April 2025 would be wave ‘C’ and needs to take on the structure of a motive wave.

Motive waves, in Elliott wave speak, are either impulse or diagonal waves. In the case of USDJPY, the rally from 2025 is quite choppy which is symptomatic of a diagonal pattern. In this case it would be an ending diagonal that resembles a rising wedge.

Each subwave of an ending diagonal must be a zigzag or multiple zigzag. The shape since the January 2026 high does have a wedge look to it.

Today’s high in USDJPY briefly touched above the April high. This makes the current high part of wave ((v)) and the market is at risk of a harsh and swift bearish reversal.

There are two models that I’m following that fit within this wedge pattern. The first calls for a long lasting and important top forming driving prices back to the congestion of 146.

The second wedge model calls for a brief dip to near 157, then another high that holds below 163.99.

For the wedge pattern to be valid, pricing must hold below 163.99, otherwise another pattern is playing out. Therefore, these models suggest within the next couple hundred pips, a large bearish reversal may appear, possibly driven by Bank of Japan intervention.

Bottom Line

USD/JPY is approaching a previous BoJ intervention zone. A bearish wedge pattern calls for a strong decline while USDJPY holds below 163.99.