USDJPY could be progressing into a counter trend rally toward 114.30-50 zone in the next few trading sessions. The currency had dropped from 115.52 highs through 112.50 mark, breaking below initial support at 112.75. Bulls are looking poised to remain in control till 115.52 is intact.
The lower degree counts are suggesting that the drop between 115.52 and 112.50 was in five waves, hence an impulse. Ideally, an impulse wave would be followed by a correction in the opposite direction. The wave structure since 112.50 might produce a corrective rally before finding resistance.
Also note that fibonacci 0.618 retracement of the above drop, potential lower degree Wave 1, is passing through 114.37 mark. High probability remains for a bearish turn if prices manage to reach there as counter trend progresses.
If the above proposed structure holds well, USDJPY would first rally towards 114.30-50 terminating its corrective wave. Thereafter, bears might come back in control and drag lower below 112.50 mark as Wave 3 progresses. The instrument is a good case to be sold on rallies, going forward.
Traders might want to take an aggressive long position to take benefit of its counter trend rally towards 114.40. They might reverse positions from 114.40-50 zone, against 115.52.
Finacademy Technical Team
Gold prices dropped through $1773 lows on Thursday before finding support again. The drop from $1793 was in-line with price action of a gartley.
The US dollar index might have carved a lower high around 96.50 mark on Tuesday. The index dropped through 95.80 levels on Wednesday before finding some support.
USDJPY is soon approaching a formidable resistance zone around the 114.40-50 mark. The currency pair has been carving a corrective rally since 112.50 lows.