USDJPY has carved a potential top just below 115.00 mark. The currency managed to print 114.97 high on Tuesday before reversing sharply lower to 113.87 level on Wednesday. Bears might target 112.75 initial support in the near term, which confirms a trend reversal.
USDJPY had been unfolding a larger degree ((A))-((B))-((C)) rally since 101.18 lows in March 2020. It is not seen here but Wave ((A)) terminated around 111.75, followed by a corrective Wave ((B)) termination at 102.59 on January 6, 2021.
Since then, USDJPY has been unfolding its larger degree Wave ((C)) and looks to have terminated around 114.97 early this week. If the above proposed wave structure is correct, prices would continue to drop towards 109.00 at least in the next several weeks.
Looking at the lower degree wave structure, USDJPY might be unfolding into its first impulse wave since 114.97 high. The currency is drifting sideways to carve wave iv as a potential expanded flat wave structure. A fifth wave lower should take out 112.75 support, terminating the first impulse wave.
Traders might be inclined to hold short positions or initiate fresh shorts against 114.97 mark. The target potential remains through 109.00 at least and up to 106.00 levels.
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.