USDJPY: Post-Brexit Action Could Indicate End Of Downtrend!

FX:USDJPY   U.S. Dollar / Japanese Yen
1169 6 25
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USDJPY reacted to the surprise Brexit result by dropping over -700 pips! But what in terms of technical analysis does this mean? Does this indicate new downside momentum? Or is this the last leg down that I said USDJPY             needed to see before we see a reversal? Let’s try to answer that question.

First, here is what I said prior to the Brexit vote:
Within this wave (v), I can also see 5 waves almost completed with an ED wave v of (v) already done and prices now falling in an leg E extension. There is a MAJOR DT TL below where prices are now (blue line). That is likely where prices are headed for and then bounce from there. That is where I am also looking to close out my long term SHORT trades on USDJPY             that I have been holding for months. But they are about to pay off BIG for me. This is part of why I do long term analysis!
And here is the 4HR Chart I posted pre-Brexit:

This is the updated chart on USDJPY and what happened post-Brexit. I can’t say that the charts predicted the negative vote but it can’t be denied that my analysis certainly strongly suggested it! In any case, my analysis has now been proven to be the correct one. Therefore, at this point, there isn’t a reason to not follow it. It rose up some pre-Brexit in what we can see now was a bull trap and dropped! And it has dropped right down to where I had a downtrend support line (red line) and the MAJOR (M) SR structure zone as well as that MAJOR DT TL (blue line) that I mentioned in my pre-Brexit analysis. Now it is holding there. From my pre-Brexit chart and my post-Brexit chart, you can see that I am labeling the bottom of this drop as the end of the overall downtrend we saw start from last August.

And don’t forget about that COMPLETED BAT in which prices are in its PRZ right now. Yes, prices spiked below the X point origination of that Bat but have not closed below it so it is still a valid bat, IMO             . Also, spikes caused by news have to be taken as aberrations both in pattern analysis and also in wave analysis. Not to ignore them but just know that news spikes are not the same as regular and ordinary price movements and should be considered as such.

Here is a comparison of the previous 45YR chart of USDJPY to the current updated one post-Brexit. What I want you to see is that despite on a smaller TF despite how big the one day move was, on this 45YR chart, it barely even registers. In fact, if you didn’t see the date on top of the chart, you’d have to look at both charts very closely to notice any difference! Why is that important to note? Because in macro terms, this drop was expected and not a surprise. And years from now, if you were to try to even spot it on a long term chart, you would be hard-pressed to even spot it!

Previous chart: June 17th 45YRS Chart
Current Chart: June 24th 45YRS Chart

Here is the chart from my pre-Brexit post on USDJPY. Notice that I was projecting another drop right down into that MAJOR DT TL (blue).

Here is the updated post-Brexit Monthly chart on USDJPY. See that prices did exactly as I expected and dropped right down into that MAJOR DT TL (blue) and the MAJOR (M) SR Structure. It is bouncing off that SR structure right now. Notice that this structure has been a strong support zone 2 times in the past. The confluence of this support zone and the MAJOR DT TL creates a strong inflection area. It is also the 50% retracement level of the previous wave (A) up. Does this mean that we will get a reversal here? By no means can that just be assumed!

From this Weekly chart of USDJPY, you can better see that drop. But if you compare it to previous weekly bars, we’ve actually have had some larger weekly drops occur in recent weeks during this overall bearish wave down! So in the larger scheme of things, this “historical” drop doesn’t really rate as anything extraordinary. But also from this chart, you can see that prices have dropped down below the X point of the Bat but has yet to close below it. Although without a close below that bat’s X point, the bat remains valid, it is less impactful now and should be very careful if to trade it. We need to wait to see bullish price action appear before we can say that there is a reversal that is imminent here according to this weekly chart. Overall, as in my Monthly charts above, I am still expecting that there is MUCH MORE downside to come in USDJPY. But looking for a corrective wave B to happen first.


Pre-Brexit Chart: You can see in this chart that I was calling for another drop down.

Post-Brexit Chart - see the main chart above.....

Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade or ask for stop loss and take profit levels. Any SL or TP given on my trades are my own I have used for my trade and are not recommendations for you to use. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!

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Hi EF, been a fun trading period hey. Thanks for your view, fwiw I have the 99 low(or one more low to come) as wave iii of (v) of C. Whether that completes a simple wave B/2 or the A of B that you have is probably a point for discussion & consideration when we're back towards 120 again. In the short-term I'm expecting this to take a bit more time and price to bottom with the iv and v to come.
The low of the Brexit spike was 98.787. So it has already hit 99 or below. But I do expect prices to drop again back down towards 99 (or below) or even a bit lower (98 maybe?) to make a new low before rebounding. So I guess we sorta agree???
+1 Reply
TTCSteve EverythingForex
our shorter term counts are different, as I'm looking at this wave (v) of C to potentially take a month of two to complete with price either now in the iv or need the end of iii of (v)....longer term counts as suggested above, I have yours as an Alt and looking for this bottom possibly forming around 95 to be the end of wave 2/B which then has the 144-169 as targets moving forward, as opposed to your wave A with B and C before the major upside to follow. Not on different planets but different enough I'd think
what is EED? man
EED = Ending Expanding Diagonal
EED = Ending Expanding Diagonal
Teekid EverythingForex
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