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
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.