USDJPY Harmonic Analysis: Bulls to regain control above 110.50

The Dollar/ Yen pair, USDJPY has presented a fine bullish setup. There is a confluence of events which technically supports a strong bullish bias. Following the 1,700 pip rally between November and December 2016, price dipped a bit in a spiky, volatile trading environment. Now as the bulls seem ready to regain control, a USDJPY Harmonic Analysis will show us the PRZ, as well as possible short term and long term targets.

25 April, AtoZForexFollowing an 18 week decline, USDJPY completed a bullish harmonic pattern. Within the space of 6 weeks, the pair recovered nearly 70% of losses sustained in 2016. Prior to the November 2016 rally, USDJPY had lost over 2,200 pips as the downtrend persisted to the 99.00 lows.

USDJPY also begun 2017 with a decline following a double top formation mainly due to profit taking. The 3 month, 1,050 pip dip ended at 107.75, the lowest level in 2017 so far.

USDJPY Harmonic Analysis USDJPY Harmonic Analysis: Daily Chart (click to zoom)

The bullish shark pattern reached its potential reversal zone a few hundred pips away. However, a long entry remains valid as the short term descending trend line got broken earlier today. There remains a gap which may be filled, but baring that, price could attack 114.50 in the coming sessions.

USDJPY Harmonic Analysis USDJPY Harmonic Analysis: Weekly Chart (click to zoom)


On a longer term, USDJPY may target the 2015 major resistance level at 125.50. The decline in price formed as price currently moves within a bullish flag formation. If price breaks out of the flag, around 112.50, we may see a repeat of the 1,700+ pip rally that occurred in November.

USDJPY Harmonic Analysis: Bullish divergence supports a rally

The USDJPY daily chart has formed a bullish divergence in addition to the bullish harmonic pattern. If today’s candle closes this way, it presents a good opportunity to long USDJPY.

USDJPY Harmonic Analysis USDJPY Harmonic Analysis: Daily Chart (click to zoom)

Also note the the short term trend line has been broken by today’s candle. For a long entry, a short term target should be at the 115 resistance level (February and March 2017 high), while a longer term target should be at the 2017 high at 118.60.

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