Despite the big deviation in the NFP report last week, there was not big trendy move in USDJPY. Price is now contained within a resistance zone. Will price break above or fall below?. The following is an analysis based on 6 November USDJPY Elliott wave analysis.
06 November, AtoZForex – In our previous updates, we expected USDJPY to continue the rally that started last month. There was a resistance and it now seems the bullish momentum is weakening and unable to break above. It’s not guaranteed yet that price will not break above. The concern is not just the weakening bullish momentum but a big Elliott wave reversal pattern completing at this zone. If this pattern is validated, we could see USDJPY fall this week. Though this emerging pattern is bearish, we still expect the bullish trend to continue. This means that the expected fall, if it happens, should be a correction of the bullish trend. Whether to sell the fall or buy the end of the fall depends on the trader. Before we show this new pattern, let’s review the last update. The chart below was used.
Price is still in the 3rd wave from 111.65. It has completed the 1st and 2nd sub-wave of wave 3. The 2nd sub-wave is an expended flat pattern. Price responded yesterday by making a 100 Pips rally. A new 5-wave rally from 112.95 to break above 114.45 high is highly probable. There may be an intraday correction to 113.45 before the bullish run. The FOMC meeting comes up later today and it’s capable of invalidating an analysis done at this time frame. A break below 112.95 won’t be good for this forecast. A break above 114.45 could strengthen USDJPY for this week and the next 2-3 weeks.
Price made dipped to 113.50 before , making the bullish run. While this scenario is still playing out especially with the break above 114.45, it’s important to check this very solid alternative.
6 November USDJPY Elliott wave analysis: bearish correction?
The chart above shows the possibility of the 1st wave to have completed with a diagonal pattern. The diagonal pattern is still valid at any price below 115.77. Preferably, we will expect price to stay below 115 and break downside. If this happens, a 3-wave correction will be expected to 110 before looking for more bullish clues. Alternatively, if price stays above 112.9 and breaks above 115.77, the scenario is the last previous update will be preferred. We will update you as price moves. Stay tuned.
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