USDJPY has rallied to fresh swing highs at 112.04 taking out 111.75 resistance. The corrective structure, which began from 101.18 lows in March 2020 might be complete or near to completion. The rally between 109.12 and 112.04 is also an impulse wave, which looks complete.
If the above structure holds well, USDJPY might be preparing to produce a pullback from current levels, and break below 109.00. Alternately, the drop could be corrective towards 110.26 levels, before bulls are back in control.
USDJPY has been unfolding into a larger degree (A)-(B)-(C) corrective rally since 101.18 mark, as discussed earlier. Wave (A) reached up to 111.75 and (B) had retraced through 102.59 lows in January 2021. Wave (C) might have completed minimum requirements after hitting 112.04 on Wednesday.
Further looking into Wave (C) rally between 102.59 and 112.04, USDJPY has subdivided into three waves. The first wave was between 102.59 and 111.65, which subdivided into five waves. It was followed by a triangle correction highlighted here on the chart.
The rally between 109.12 and 112.04 is Wave (C) termination or Wave 1 of C. Either way, traders might prepare to face strong resistance around 112.00-50 mark going forward.
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.