$USD v. $JPY Completes A Bearish Wolfe Wave | #yen #BOC #forex

FX:USDJPY   U.S. Dollar / Japanese Yen

Watch for this potential decline as price completes the 5-point regimen of a Wolfe Wave , naturally seeking full cycle completion at the 1-4 "Take Profit" Line - See M15 chart:


At first glance, casting a Fibonacci matrix over the structural high-low with 0.386/0.500/0.618/0.786-Fibs as significant anchor levels might grant a few clues as to what depth of retracement (if there were to be one, as per signaled by this Wolfe Wave ) could be attained.

Yet, combining with the analysis of internal highs and lows that have been inscribed during the recent upswing might reveal a few probabilities.

First, the 0.386-Fib level rests at the first significant resistance to the enduring upswing, as price reached a high of 119.453 (equaled at 119.336 at the 38.6 handle).

This 38.6 handle is significant in its forward projection, as it also lent a R/S level for the ensuing channel/consolidation oscillating about its 119.348/119.453 spine.

Second, there is the 0.618-Fib level, which has served as the lowest tolerance level in that upswing, as price closed only once below it at the first test support on 24 AUG 2015 @ 13:45. After than, it was all whipped cream over custard, as price remained buoyant relative to that Fib handle.

Last is the 0.786 level, which served a similar mechanical function as that of 0.618.

Looking forward, these three levels are to be heeded.


A decline to the 1-4 Line is probable, if one had to rely on the Wolfe Wave principle. However, there are two prudent measures worth applying here:

1 - Consider a break across with closing across (BACA) below WW's 2-4 Line


2 - Consider a validation of the support-now-and-resistance-then (SNART) event along that same 2-4 Line, as suggest by the dashed arrow.


David Alcindor
Predictive Analysis & Forecasting
Durango, Colorado - USA


David Alcindor

David Alcindor
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01 OCT 2015 - Chart Update / Tech-Note:

Hello, @iefan:

The Predictive/Forecasting Model's target remain bullish as shown. There is a large consolidation with promises to further upside as well on a larger timeframe, which I continue to follow. The original analysis looked at the possibility of 117 vicinity based on possible Fibonacci validation levels, but this is becoming a lesser probability.

Since then, the Model has continued to look up and up:

David Alcindor
+2 Reply
muskie32 4xForecaster
Hi David Just curious regarding USD/JPY. I see you haven't updated this chart for a longtime. How does your outlook on GLD which is bearish and the strength of JPY co exist. There seems to be a definite correlation in the strength of the YEN and the strength of gold. I believe you are bearish on the USD would this not make GLD stronger? Thanks your work is quite fascinating.
+1 Reply
Hello @muskie32 - The relationship between $USDJPY and $XAUUSD has never been correlated, except perhaps for the past 5+ years (and this is more of a consolidation-based relationship than an intrinsic positive correlation), but on a historical basis, and especially over the past several decades (at least since 1987 as far as TradingView data can fetch), that correlation has been tumultuous.

In any case, at this point, this relative strength chart suggests that we have reached a significant level (a qualitative target at "TG-Lox" according to the Predictive/Forecasting Model, and that further breakdown is favored down to the level illustrated in the chart, whereas a lower probability of reversal exists from current level.

Here, we are looking at a MONTHLY chart, so I would expect time to be a factor in the development of this chart. Still, a narrowing geometry has developed over this consolidation period, and a continuation pattern might reveal itself if and once a 5-point geometry completes.


David Alcindor
4xForecaster 4xForecaster
ADDENDUM - Note that I purposefully pit $JPYUSD against $XAUUSD (as opposed to USDJPY vs. XAUUSD) using $USD as the pairs' common denominator, so that its relative effects is cancelled out in the overall equation.

29 SEP 2015 - Chart Update / Tech-Note:

As price reversed at the bottom target, then reached and also reversed at the top target, we are now left to wonder what should come next.

If we looked at the recent price action, we are witnessing a 5-wave advance, consistent with a bullish impulse. However, this follows at the heels of a sharp decline. Therefore, we have to consider two possibilities:

1 - This current impulse is represents a 5-wave correction - As you may already know, there is ONE and only one Elliott Wave pattern that starts with a 5-wave among all corrective patterns, and this would be a Flat. So, look for a 5-3-5 internal development to confirm that what is starting is indeed a correction. Another clue that this rally might be a correction would be an early departure to the downside and away from the rising channel.


2 - This current impulse is a bullish expression of an impulse, with an interim correction. Here, I would wait for the interim correction to remain above the recent low, and to complete then link into an impulse breaking above the high carved at the 0.386-Fibonacci level.

These criteria will allow to define in general terms the probable direction of price as it continues to evolve at this smaller scale.


David Alcindor
+6 Reply
iefan 4xForecaster
29 SEP 2015


Hi David. Geo/WW forming...I suspect a larger Geo is developing, where Point 3 has just formed and we are busy with the Point 4......
+2 Reply
Yes, very possible - Here is a problem:

1 - Geo points to temporary down


2 - Predictive/Forecasting Model points to ultimately up

The main distinguishing feature, though, is that the Geo is better at offering a probable pathway, whereas the Model is good at pointing to where price wil go eventually while remaining mute about the interim pathway. So, definitely worth heeding.

Here is the trade I took a bit back:

David Alcindor
+2 Reply
iefan 4xForecaster
Great, from a technical point of view, if entering at the Green Box, does the Stop Loss go below the Price at the Red Box, or the Trend Line drawn from the Red Box?
+1 Reply
@iefan - I would stay off of the channel's lower border and use that as a forward guideline for SL placement.

As you are seeing, I am using median and median of median in the channels. These are likely the slopes offered dynamic R/S level as the price moves across the field - This is a very old technique I used to use (see some archives in my older Facebook page) ... Just taking a break from the Geo, so that I do not lose "mental sight" of other intuitive tools I have relied upon in the past:

David Alcindor
+2 Reply
4xForecaster 4xForecaster
ADDENDUM - Tech-Note:

As you may know, targets that carry "Lo", "Hi", or "Lox", "Hix" are less probable in terms of attainment, but represents levels of reversals if and once attained - Because they do not carry numbers in their designations, but qualitative statements suggesting a bearish-low ("Lo") or extreme-low ("Lox"), as well as a bullish-High ("Hi") or extreme-high ("Hix") qualifier, they are hence called qualitative targets, or simply "Qual-Targets". They are defined by the Predictive/Forecasting Model as levels that, if attained, will most probably be associated with not just retracement (as in 0.386, 0.500, or 0.618-Fib retracement levels), but instead associated with reversal (i.e.: falling at least 0.786 or greater, up to 1.313, 1.272, 1.313, 1.414 or 1.618 reversal orders.

In contrast, those targets that are associated with numbers are those that forecast a retracement in the order defined above (i.e.: 0.386 to 0.618, and rarely up to 0.786), and represent numbers of higher probability of attainment. For this reason, they are defined as quantitative targets, or simply "Quant-Targets".

The TG-Hi I have ascribed to the chart is a Qual-Target, hence represents a lower probability of attainment, but a higher probability of reversal if reached.

However, in these simpler trades, where the timeframe is not optimal to the Predictive/Forecasting Model (which was calibrated for the H4 level, instead), I often turn to structural analysis, looking at past levels of R/S activities, such as in the following chart, where there is also an alignment with a significant 1.618-Fib extension value:

If you look at that structure, combined with this 1.618 value, you might intuitively think that the market would also be barred from rising further than the upper border of the rising channel. Hence, it would be prudent to consider the following path, as we seek the HIGHEST probability set up, and thus forgo the extra height, which may be or may not be occurring in terms of price action ... This is where reason stops and greed grows like willing weed:

OVERALL - Always set your expectation based on the physical attributes of the market. Here, I mean that if you see a R/S level that would reasonable impose a resistance as in this case, then assume that it will, rather than willing it to go higher.

This is particularly true when a combination of technical factors come to a narrow cluster of resistance. In such a case, follow that clue and don't will it to a level that becomes delusionally impossible.

Plus, as this level is likely to offer a slight push-back, then use the medians of the channel to define a reasonable level of re-entry.

Without using my Model, and simply turning to the simplest tools (channel, Fibo and R/S levels), there is a lot any level of proficiency trader can do with simply gazing at the chart. Easy, right?

David Alcindor
+2 Reply
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