USD/JPY – 111.27
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.
Dollar’s stronger-than-expected retreat from 114.74 signals top has been formed there, this also indicate at least the first leg of correction from 107.32 has ended there, hence consolidation with mild downside bias is seen for weakness to 110.50, then 110.00, however, near term oversold condition should prevent sharp fall below support at 109.55 and reckon 109.00 would hold from here, risk from there is seen for another rebound to take place later next month.
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 111.65-70, then 112.10-20 cannot be ruled out, reckon 112.65-70 would limit upside and bring another decline later. Only a daily close above previous support at 113.09 (now resistance) would abort and signal the retreat from 114.74 has ended instead, bring further gain to 113.50-60 and then 113.91 resistance. A daily close above this level is needed to retain bullishness and signal the pullback from 114.74 has ended, bring further gain to 114.05-10, then retest of 114.74 which is likely to hold from here. Looking ahead, above said resistance at 114.74 would extend recent upmove to 115.00, break there would signal the correction from 118.66 top has ended earlier at 107.32 and the rise from there may bring further gain to previous resistance at 115.51.
Recommendation: Sell at 112.50 for 110.50 with stop above 113.50
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.