USDJPY rallied through 114.30 levels on Friday before finding resistance again. The currency pair seems to have carved an expanded flat corrective Wave (ii) as labelled on the 4H chart here. If correct, the currency pair should reverse lower toward 111.30 as Wave (iii) progresses.
USDJPY has terminated a larger degree corrective rally ((A))-((B))-((C)) around 114.70 levels on October 19. The above corrective wave had begun from 101.18, March 2020 lows, and is a part of larger degree triangle consolidation.
USDJPY potential remains for a drop toward 106.00 levels in the next several weeks if 114.70 stays intact. Bears would be targeting 109.15 levels to confirm the trend has reversed lower. Initial price support is around 113.00, followed by 110.80 levels while resistance is at 114.70 mark.
Alternatively, if the drop from current levels finds support around 111.30, bulls might be back in control to push higher above 114.70. We shall bring the scenario if relevant in the next few trading sessions.
Traders might be preparing to initiate fresh short positions around 114.20-40 zone, with risk above 114.70 and potential target towards 112.50 and 111.40 levels respectively. The fibonacci 0.618 retracement around 114.20-30 is expected to provide strong resistance.
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.