USD/JPY – 112.05
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.
Although the greenback extended gain to 114.50 earlier this month, lack of follow through buying on break of previous resistance at 114.39 and the subsequent retreat suggest the entire corrective rebound from 108.13 has possibly ended there (tentatively wave b top), hence consolidation with downside bias is seen for the retreat from 114.50 to extend weakness to 111.45-50, then 110.95-00, however, reckon downside would be limited to 110.60-65 and price should hold above 110.00. Only break of support at 108.82 would provide confirmation and signal wave c has commenced for retest of 108.13 first.
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 upside, whilst initial recovery to 112.65-70 is likely, reckon 113.40-50 would limit upside and bring another decline later to aforesaid downside targets. Above 113.55-60 would bring another bounce to 114.00, then test of said resistance at 114.50 but only break there would extend the corrective rise from 108.13 to 114.90-00, then towards previous resistance at 115.51 which is likely to hold on first testing.
Recommendation: Sell at 113.50 for 111.50 with stop above 114.50.
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.