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USD/JPY Elliott Wave Analysis

USD/JPY – 111.39

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.

As the greenback has recovered after falling to 110.11 early last week, suggesting consolidation above this level would be seen and corrective bounce to 112.20 cannot be ruled out, however, reckon upside would be limited to 112.80-85 and bring another decline later. A break of said support at 110.11 would signal the erratic decline from 118.66 top is still in progress, bring retracement of early upmove to 109.90-95 (50% Fibonacci retracement of 101.19-118.66) and then 109.50 but reckon downside would be limited to 109.00 and price should stay well above 107.85-90 (61.8% Fibonacci retracement), bring rebound later.

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 112.20-25 cannot be ruled out, reckon upside would be limited to 112.80-85 and bring another decline later. A daily close above 113.54 would abort and signal low is formed instead, bring a stronger rebound to 114.00-10 and possibly 115.10-20 but resistance at 115.51 should remain intact, bring another decline.

Recommendation: Sell at 112.80 for 110.80 with stop above 113.80.

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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