USDJPY 4H chart suggests a 5 wave rally might be complete from 102.59 lows through 106.22 highs yesterday. Bulls might be inclined to print yet another high towards 106.40/50 mark, before terminating the above impulse wave.
Ideally, an impulse wave is followed by a corrective wave in the opposite direction. If we go by the above chart, USDJPY could be soon preparing for a corrective drop A-B-C, which might drag prices lower towards 103.80 zones.
Also note that the Fibonacci 0.618 retracements of the entire rally between 102.59 and 106.22 are seen close to 104.00 marks. Bulls might remain poised to take back control if USDJPY managed to drop through 103.80/90 zone going forward.
Furthermore, the past resistance turned support zone around 104.00/20 is also seen close to the above potential bullish reversal zone. The above convergences make 103.80/90 levels a high probable turning point going forward.
The 4H chart wave structure is as follows: USDJPY has completed 5 wave rally between 102.59 and 106.22, potential Wave (1). A corrective drop A-B-C could materialize soon towards 103.80/90zone, potential Wave (2). The rally could then resume to fresh highs, as Wave (3) unfolds.
USDJPY might remain in control of nears for the next few trading sessions. The initial support comes in around 104.83, which is Fibonacci 0.382 retracement of the above rally. Watch out for an A-B-C decline towards 103.80/90 zone before bulls are back.
Finacademy Technical Team
USDJPY could be progressing into a counter trend rally toward 114.30-50 zone in the next few trading sessions.
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.