USD/JPY – 112.48

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

The greenback did rise to our indicated upside target at 113.00 and although price has eased from 113.05 and minor consolidation below this level would be seen, reckon downside would be limited to 111.90-00 and renewed buying interest should emerge above 111.20-30, bring another rise later, above said resistance at 113.05 would extend the rise from 108.13 low to indicated dynamic resistance at 113.35-40 (50% Fibonacci retracement of 118.66-108.13). Having said that, a daily close above there is needed to retain bullishness and suggest the entire fall from 118.66 has ended at 108.13, then further gain to 114.00 and possibly 114.60-65 (61.8% Fibonacci retracement) cannot be ruled out but price should falter below key resistance at 115.15, bring retreat later.

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Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the downside, whilst initial pullback to 112.00 cannot be ruled out, reckon downside would be limited to 111.00-10 and bring another rise later. Below previous resistance at 110.60 (now support) would defer and suggest the rebound from 108.13 has possibly ended, bring weakness to 110.00, however, still reckon downside would be limited to 109.55-60 and price should stay well above said recent low at 108.13, bring another rebound later. 

Recommendation: Buy at 111.50 for 113.30 with stop below 110.50.

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 commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

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