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. It might be into the last leg up towards 114.40 level before resuming lower again.
Looking at the short term wave structure since 115.52 high, the USDJPY price action has carved an impulse Wave 1 between 115.52 and 112.50. It is producing a three wave corrective rally potentially towards 114.40 mark, terminating Wave 2.
Also note that the fibonacci 0.618 retracement of Wave 1 is passing through 114.40-50 zone as well. High probability remains for a potential bearish reversal if prices manage to reach there. Furthermore, a conventional Head and Shoulder pattern might be unfolding with potential right shoulder being carved around 114.40 level.
If the above proposed wave structure is correct and holds well, USDJPY could be well underway towards 110.00 and 109.00 levels as Wave 3 begins to unfold. A break below 109.00 will also confirm that the currency is carving a major bearish reversal and there is further potential.
Traders might remain inclined to initiate fresh short positions now (114.10-20); also look to add more with risk above 115.50 mark. Target potential remains 110.00 in the near term.
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.
Gold prices dropped sharply to $1770 on Tuesday completing a potential zigzag correction that had begun since $1793 earlier.