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Chart Of the Day Updates:
Usd-Jpy: Elliott Wave set-up
U.S. dollar was well supported on Friday, on the day that major U.S. based equity earnings numbers were released. After the disappointing results from Bank of America and General Electric, S&P futures declined powerfully from weekly 1095 highs, down to 1076 lows, and instigated a move higher in the U.S. currency against the majors pairs that day.
On a weekly basis the U.S. dollar was still trading lower against the majors but not against the Jpy, which finished as the weakest major currency in the past week of trade.
The winner of the week was the pound, after a move higher of 3.6% against the U.S. dollar, and with a 4.79% move up against the Japanese yen.
The USD/JPY pair has gained nearly 330 pips from 7th of October 88.00 lows, and the bulls do not look to be done just yet, considering our Elliott wave view.
USD/JPY Elliott Wave view
Our Elliott wave charts, described below, signal for another push up into the 91.50-91.70 resistance area at the start of the new week, before a top may be technically hit.
4 Hour chart
Yen prices have traded up over the last few sessions into our wave C target area, shown around the 91.10 -91.50 zone, after the break of the 90.43 top. If the market really is forming a corrective structure in a blue wave B) then this retrace from 88.00 support zone, to the current highs may already be completed.
USD/JPY 4 Hour chart
Usually wave B) makes a retrace for at least 38.2% of the wave A) distance, so traders may see more up-side pressure in the mid-term, before the wave B) is finally complete. The intra-day wave count (shown) on the red wave C structure also needs to be checked for confirmation that this can easily follow through.
30 min chart
On the 30 min yen chart, the red wave C does not look to be completed yet, as the market did not make five waves up as would be expected. Wave C is an impulse wave, which means it needs to be sub-divided by five smaller waves.
USD/JPY 30 min chart
As such, the market is now probably forming a corrective red wave IV), where a pull-back down to the Fibonacci support region could lead to a bounce. This could lead to a move towards the 91.50 zone, with an expected wave V) completion. The current wave IV) must not trade into the wave I) area shown at 89.89, otherwise the wave count will be invalidated.
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