USDJPY seems to have carved a meaningful top around 114.70 mark on Wednesday. The currency has dropped through 114.00 since then and is looking to drag lower below 113.80 in the near term. Bears are poised to remain in control from here.
USDJPY has terminated a larger degree Wave ((C)), within the corrective ((A))-((B))-((C)) rally that had begun since 101.18 lows in March 2020. If correct, the currency is looking to drop toward 105.00-106.00 retracing the entire above rally.
Looking at the larger degree wave structure, USDJPY had rallied between 101.18 and 111.75 to terminate Wave ((A)). The subsequent drop to 112.59 on January 6, 2021 was Wave ((B)) and since then, the rally through 114.70 is potential ((C)) termination.
USDJPY bears will remain inclined to carve a similar degree corrective drop retracing towards the fibonacci 0.618 mark of the above rally. A break below 113.90 could be the first confirmation of a potential bearish resumption.
Traders might be preparing to initiate fresh short positions around 114.40-50 zone or continue holding existing shorts. Potential risk remains above 115.00 and target is towards 109.00 levels in the next few weeks’ time.
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.