USD/JPY Medium Term Elliott Wave Analysis

For a long time the situation in USD/JPY was unclear from the long term point of view. In fact the uncertainty remains but there are signals that my favorite pattern (terminal impulse) is developing, which could give me a possibility to enter a position with a relatively close stop loss and very huge profit potential. The chart presents my working count. It suggests that the whole movement started from 1.0166 is a huge terminal impulse (ending diagonal) and we should be currently in wave 5 of it. This pattern is with extended wave 1, the length of wave 3 is 61.8 % of the length of wave 1 and it is logical to expect the length of wave 5 to be 61.8 % of the length of wave 3. The corresponding level of logarithmic scale is 123.55 and my idea suggests that we will see a multi years high around this level. What’s more, such a pattern is always the end of a movement and the typical for it is the fact that it should be completely retraced for a less time than took to form (more likely for 25% to 50% of the time). In our case this means that if I am correct, a long term reversal is forthcoming (an end of the carry trade) and one should expect a sharp fall of at least 22 figures (the minimum target should be 101.66 - the beginning of the potential terminal impulse). However this assumption requires an initial rise above the 1-3 trendline shown on the chart (I wrote that the ideal target will be 123.55) followed be a sharp fall and a subsequent fall below the 2-4 trendline will be a confirmation for my idea. The terminal impulse idea will be aborted only at 128.35 where wave 3 will become the shortest wave.

Karoll Financial House

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