USDJPY drops to its six month old trend line support around 110.40/50 levels as seen on the 4H chart here. Probabilities remain for a drop and extend its correction but we would prefer to go with potential bullish bounce around 110.50/55 levels.
USDJPY might be carving a lower degree wave iv around 110.40 levels. If correct, bulls might remain poised to rally from current levels and push towards 112.50 to terminate potential wave v of 5 of (3) respectively.
Looking at the wave structure since 102.59, USDJPY is seen to be unfolding a larger degree Wave (C) towards 112.50 and 113.00 levels respectively. Within Wave (C), bulls have managed to carve Waves (1) and (2) already, and Wave (3) is unfolding towards 112.00 levels at least.
Also note that wave 3 of (3) was an extension sub dividing into 5 waves, which terminated around 111.00 levels earlier. Further, Wave 4 retraced lower and terminated around 107.47 levels. If the above structure is correct, USDJPY bulls are now unfolding Wave 5 towards 112.00/50 at least.
Most traders might be willing to hold long positions and add more around 110.50/55 with risk below 109.00 and potential target towards 112.50/113.00 levels respectively.
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.