USDJPY had dropped through 108.50 odd levels yesterday and yet again bounced of its 05 month old trend line support as seen on the 4H chart here. This confirm that trend is up and bulls are here to stay in control until 108.32 remains intact.
USDJPY had bounced off sharply, rallying almost around 80 pips from the day’s low around 108.37. The pattern is also that of an engulfing bullish right at the trend line. If the structure holds well, bulls are now looking poised to push through 111.50 and higher.
Looking at the wave structure since 102.59 lows registered on January 06, 2021, USDJPY has been unfolding a potential impulse wave within Wave (C) of a larger (A)-(B)-(C) rally. Furthermore, the iii of 3rd wave was found to be extended.
The recent lows around 107.47 could be labelled as Wave 4, which leads to a potential Wave 5 rally towards 112.50 levels, going forward. If the above unfolds accordingly, it would be Wave (3) termination, which shall be followed by Waves (4) and (5) to complete the structure.
USDJPY might drop through 108.90 levels intraday before resuming its rally further. Ideally bulls should manage to keep prices floating above 108.57 lows registered yesterday. Immediate resistance is seen around 110.00, followed by 111.00 levels respectively.
USDJPY remains a good candidate to be bought on dips from here, with a potential target towards 112.50 over the next few trading sessions. Watch out for a break above 109.60/70 levels for the rally to accelerate.
Finacademy Technical Team
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