USDJPY continued the bearish run this week after an ending diagonal pattern that completed early this month. What are the next levels to watch out for? The following is based on 23 November USDJPY Elliott wave analysis?
23 November, AtoZForex – Since early November, USDJPY has dropped about 3.5% after price completed a diagonal pattern. The move that followed was typical of what usually happens after the completion of this pattern. At the top of the pattern, we also saw a head and shoulder chart pattern and it was no surprise to us how price reacted afterward. Price has moved about 250 Pips from the end of this pattern.
Our focus has now shifted from the diagonal pattern that preceded the fall from 114.70 to what pattern is emerging as price falls. In the last update, we looked at two scenarios as shown in the chart below. The current dip was expected to be corrective as we have stated even before the completion of the diagonal. The speed of the bearish move also looks impulsive. There is need to check this closely and discern what price could do next.
The chart above shows two scenarios. The preferred is in green and purple showing a double zigzag pattern. This is expected to continue to 111. At the end of this, a move upside is very likely. Alternatively, a 5-wave move downside to 110 could mean price would go much deeper and the bullish run may not return as soon as expected. 113.35 must hold before price heads to 111-110 or these scenarios will be invalid. A strong break above would mean the bulls are returning quicker than expected and we should adjust our view.
Price kept the bearish move after the last update shown above. The chart below shows what we have now.
23 November USDJPY Elliott wave analysis: what next?
The two scenarios are still valid and both should lead to price correcting upside or a total bullish trend reversal. The possible levels of reversals are also included. The first reversal zone is 111.04-111.16 for the double zigzag corrective pattern. If price goes deeper, we could have an impulse wave instead with 110.16-110 as the reversal zone. Price could be at the verge of a correction or total reversal with confirmation at the break of the channel. A strong break below 110 en-route to 109 is also likely with confirmation by a break below the channel. Stay tuned for the next update.
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