USD/JPY Elliott Wave Analysis

USD/JPY – 89.38

USD/JPY – Wave (1) of 2 has ended at 84.82 and wave (2) is unfolding

The greenback met renewed selling interest at 91.28 and extended the b leg of wave (2) from 93.78 towards our indicated downside target at 88.24-32 (61.8% Fibonacci retracement and previous support), however, reckon chart level at 87.36 would contain weakness and bring c leg of wave (2) later.

Our latest preferred count is that, wave 1 ended at 87.10 followed by a 3-legged wave 2 at 101.45 and the wave 3 is unfolding with wave (1) of 3 sub-divided into i: 91.73, ii: 97.79, iii: 88.01, then wave iv at 92.33, therefore, the wave v of (1) has ended at 84.82 and wave (2) is now unfolding with a leg possibly ended at 93.78) and b leg of wave (2) should be limited to 87.36 and bring c leg of wave (2) later.

On the upside, only a daily close above resistance at 91.28 would suggest the fall from 93.78 has possibly ended, then gain to 92.50/60 would follow but breach of resistance at 93.78 is needed to indicate the rise from 84.82 is still in progress in c leg for headway to 95.00/10 (61.8% Fibonacci retracement of 101.45-84.82), however, reckon price would falter well below resistance at 97.79.

Our alternate count is that only wave (3) of 1 has ended at 87.10 and the rise from there to 101.45 is the wave (4) of 1 and the (5) of 1 has possibly ended at 84.82. In the event the greenback is able to close above 95.10 on a daily basis, this would add credence to this slightly more bullish count (only for the near term) and bring stronger correction in wave (2) of 3 towards 97.79.

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 is taking place with wave 1 ended at 87.10 earlier this year in January and wave 2 should falter well below 110.67 resistance and bring wave 3 in 2010. The major downtrend should resume for fall to 84.00, 82.00 but the major low at 79.75 should hold on first attempt.