USDJPY is either progressing within Wave (5) towards 112.50 or is still unfolding Wave (4) as double zigzag towards 107.50 before resuming higher. A break above 110.80 would confirms the former probability unfolding.
USDJPY’s preferred wave count is pointing lower towards 107.50 to complete a double zigzag correction, before resuming its rally towards 112.50 as larger degree Wave (5) progresses. The currency can push towards 110.50 before reversing sharply lower.
Looking into the larger degree wave structure, USDJPY has been unfolding into (A)-(B)-(C) corrective wave, which began from 101.18 lows in March 2020. The structure is expected to terminate above 111.75 at least, to complete. The pair could slip lower thereafter.
Further, Wave (A) terminated around 111.75 while (B) dragged lower towards 102.59 before termination. If correct, Wave (C) is progressing towards 112.50 and higher before the pattern completes. If Wave (C) is subdividing into 5 waves, USDJPY is probably unfolding a larger degree Wave (4) towards 107.50 as discussed earlier.
Traders might prepare to initiate long positions toward 107.50 going forward. Only a break above 110.80 would warrant that Wave (4) completed at 108.75 and that Wave (5) is progressing toward 112.50.
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.