AndyM
Long

USDJPY to possibly set a new top in the next few weeks

FX:USDJPY   U.S. Dollar/Japanese Yen
Good morning. I was looking at the movement which USDJPY             is tracing right now and realized it was a flat. It is very likely to be just a correction and not a reversal. So the upward movement is supposed to resume some time from now.

We are in a ABC             correction, 3-wave             A, 3-wave             B and tracing a 5-wave             C down right now, target being 1.382 of A = 117.70. This is a flat correction , with a magic 0.886 retracement in B.

So present structural development made me think that the upward movement is not over, and we are going to see the completion of a full 5-wave             impulse which started late 2011, which will become wave A of an upward correction following a nearly 40-year long impulse we and our parents could contemplate.

What this means in the short term: there will be a bounce upwards 2-3 days from now. In this movement we will possibly see a new top in the next month or so but it's unlikely to be the start of wave 5 - we need to respect some time proportions in order to keep "the right look" of the impulse and therefor need to allow the correction in w4 to last a bit longer.

The long-term timings of the development of the present structure in JPY are aligned with DXY: jan 2016 - completion of wave 4 and start of wave 5. Nov 2016 - completion of wave 5 and a substantial reversal.
Agree, just like the USDCAD, DXY and SPX500 one more leg up for the USDJPY. The catalyst would be a rate hike in september or december.
+1 Reply
I think it's done for, and this is wave 1-2 of a large downtrend, same as S&P. If you think about it, why would it not follow S&P? This rally was 100% carry trade.
+1 Reply
AndyM PRO IvanLabrie
Carry trade, indeed. Agreed.
But there's also the Dollar factor: I expect an upswing in usd strength right now, so more weakness in everything else. And even more strength in the Dollar in H1 2016, so w5 for USDJPY up makes sense.
And finally, it's the duration of the whole correction that made me think we are dealing with a full 5-wave impulse, and not just an ABC which started in late 2011. We need a fairly long-lasting correction. 7-8-10 years, something substantial. So an impulse is more likely (although disputable).
+1 Reply
I see, yes, it's possible. I'm short with break even stop for now.
Hopefully we'll get more clarity here soon.
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