USDJPY completed a Bat pattern at the base of a reversal zone last week. How far will it drop? The following 23 July USDJPY Elliott wave analysis looks at what could happen next based on Elliott wave theory.
Last week, we spotted a Bat harmonic pattern on the daily time frame. The reversal zone was at 113.30-113.60. Price got to 113.20, completed a wedge pattern and dropped very fast. In today’s update, we would look at what specific Elliott wave pattern completed at the same zone as the Bat harmonic pattern and what could happen next. The chart below shows the Elliott wave analysis of the rally from 104.5 (22-24 March).
23 July USDJPY Elliott wave analysis: medium-term, H2
The rally was obviously corrective. A triple zigzag pattern completed at 113.2. At the end of a corrective pattern, we usually see price continue in the opposite direction to complete an impulse wave much bigger that the preceding corrective pattern. However, if after the end of the correction, the move that follows is corrective (instead of being an impulse wave), it means the bigger correction is set to continue or price would emerge into something else. In this case, the drop was fast and we would expect at least an a-b-c drop down to 108. Price is currently struggling to break below 111.5-110.9 support zone. A break below is expected. We analyzed the drop from 113.2 as the chart below shows.
23 July USDJPY Elliott wave analysis: Intraday view, 15 Mins
The drop from 113.2 is impulsive. Price is making probably the 4th sub-wave of iii at the support zone. Price is expected to break below the zone down to 110 to complete the impulse wave dip. At the end of this, we would expect a bullish correction before price goes further downside. On a bigger scale, we would be looking at a bearish impulse wave or a bearish zigzag corrective pattern (or any other corrective pattern). If price works with this forecast, we should expect USDJPY dip to 108 in the next couple of weeks. Stay tuned for the next update.
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