USD/JPY – 112.61

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 only slipped to 112.03 late last week before rebounding (just missed our long entry at 112.00) and gain to 113.00-05 cannot be ruled out, however, as outlook remains consolidative, reckon upside would be limited to 113.50 and resistance at 113.75 would hold from here, bring further choppy trading. Only a break of 113.75 would revive bullishness and signal the rebound from 110.84 is still in progress and may extend gain to 113.91 resistance, break there would add credence to our view that the pullback from 114.74 has ended at 110.84, bring further rise to 114.30-35, then retest of said recent high which is likely to hold on first testing and price should falter below 115.00-10.

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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 cannot be ruled out, reckon indicated support at 111.99-112.03 would limit downside and bring another rise later. Below 111.99 would risk test of support at 111.41 but a daily close below there is needed to signal the rebound from 110.84 has ended, then retest of this support would follow, a drop below this level would revive bearishness and extend the fall from 114.74 top to 110.50, then 110.00.

Recommendation: Stand aside in the meantime.

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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