Understanding cycle structures helps traders navigate complex forex moves with clarity. AUDJPY analysis showed Elliott Wave principles identified a corrective end and anticipated a sharp 400‑pip sell‑off.
The Forecast: Identifying the Wave 2 Peak
In our September 21, 2026 analysis, AUDJPY was completing a 3‑wave rally from the 108.90 region. The rally into 112.61 marked wave 2 (or ((c)) of 2), aligning with the 1.618 Fibonacci extension at 112.88. A red Turning Down tag appeared near 112.61, setting 112.6119 as the invalidation level. With wave 2 complete, bias shifted to a reversal lower into sub‑waves (i) and (ii), preparing for wave 3 decline.
See chart below
The Outcome: Impulsive Drop 400 Pips In Motion
Following the 112.61 peak, AUDJPY broke down sharply, completing a clean 5‑wave impulse with wave ((iii)) of 3 near 108.50. The decline spanned over 400 pips, with price consolidating around 110.11, still more than 360 pips below the highs. Structurally, AUDJPY is completing a (w)–(x)–(y) double corrective bounce in wave ((iv)) near 110.11. As long as price stays below the invalidation level, another leg down in wave ((v)) is expected to finish wave 3. This should be followed by a corrective bounce in wave 4, then a final swing lower in wave 5 of (C) of ((2)). Afterward, the pair is projected to turn higher, resuming the broader bullish sequence.
See chart below
Key Takeaways for Traders
For traders, rejection below the 1.618 Fibonacci extension at 112.88 confirmed the corrective structure had ended. Clear invalidation levels, like 112.61, provided disciplined risk management by defining exposure against the higher‑degree trend. Patience during corrective phases—such as the ongoing wave ((iv)) bounce—remains essential, offering clarity before the main trend resumes.
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