USDJPY moved away from the 111 handle to establish a big move upside. How long will it last? The following 31 July USDJPY Elliott wave analysis looks at what could happen next.
After many days trapped between 110.6 and 111 price levels, USDJPY finally broke away after the confirmation of a bullish reversal chart pattern. The drop to 110.6 completed an impulse wave and we were alerted of price making at least a 3-wave correction upside. In the last update, we looked at the sub-waves of the expected bullish correction as well as the formation of an inverted head and shoulder pattern. These all signaled an imminent rally. After price balanced from the BOJ monetary policy statement, it continued upside. The chart below was used in the last update.
After the fast rally to 111.20 last week, price completed an intraday corrective wave b before rallying toward 111.2 thereby completing an inverted head and shoulder pattern. At break above 111.20, price would have confirmed the end of wave a-b and even the inverted head and shoulder pattern (with 110.6 as the base). The ultimate target will be 112.2. If price stays below 111.20 and drops back to 110.6 and below, this forecast would be invalid thus leading to a move toward 110 handle.
31 July USDJPY Elliott wave analysis: what next?
Price significantly broke above 111.20 to establish the expected bullish corrective move. We would be expecting the rally to last up to 111.88 or even 112.2 before price starts dropping again. Unless a sudden bearish move back to the head and shoulder zone, the rally should go a bit more. Stay tuned for the next update.
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