USDJPY has rallied strong from 109.20 levels as expected and pushed through 110.20 levels today. If a triangle terminated around 109.20, bulls are targeting 112.50 against 109.20 levels. Alternately, if a larger degree Wave (4) is still unfolding, bears could push lower from here.
USDJPY rally from 102.59 lows registered on January 06, 2021 seems to be unfolding into 5 waves or an A-B-C with potential target around 112.50 at least. We present both scenarios here: In case of an impulse rally, bulls might have managed to carve Waves (1), (2) and (3) around 104.40, 103.30 and 111.65 levels respectively.
Since then, potential Wave (4) has been unfolding and might drop towards 107.40/50 zone. It is also previous Wave 4 termination of one lesser degree. If correct, USDJPY might turn lower from here and push through 107.50 levels before finding support again.
Alternately, if USDJPY is unfolding into an A-B-C rally towards 112.50 levels, bulls might have terminated Wave A around 111.65 levels and B around 109.20 levels over the last week. Please note that Wave B was a triangle in this case.
If USDJPY remains above 109.20 levels, Wave C might be progressing towards 112.50 levels already. Either way, traders might be preparing to initiate fresh long positions soon.
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.