Technical Analysis:
USDJPY seems to be unfolding a larger degree Wave (4) as a combination towards 107.50 levels, before resuming higher. The currency pair has carded a meaningful lower high around 110.50, and is now looking to complete the double zigzag pattern.
Last week we had discussed the possibility of a combination unfolding as larger degree Wave (4) and that prices should hold below 110.80 to keep bears in control. The alternate count might be unfolding now as the pair has dropped to 109.10 mark.
USDJPY is now facing strong resistance at 110.50, while interim support is around 108.75 levels respectively. The pair might produce a corrective rally towards 109.80 levels in the next 1-2 trading sessions before turning lower.
Alternatively, a drop below 109.00 will confirm that USDJPY is heading straight towards 107.50 mark. The entire structure since 111.65 will be marked as a combination (double zigzag), to terminate Wave (4). Bulls will remain poised to resume higher thereafter.
USDJPY is carving a larger degree Wave (C) towards 112.50 and 113.50 levels, within the corrective (A)-(B)-(C) rally that had begun since 101.18 lows. Traders might initiate fresh long positions around 107.50 mark going further.
Prepared by
Finacademy Technical Team
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