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USD/JPY Elliott Wave Analysis: Price Chart Exposes Bearish Pattern

USD/JPY Elliott Wave Analysis: Price Chart Exposes Bearish Pattern

Jeremy Wagner, CEWA-M, Head of Education


USD/JPY finished 2019 within 100 pips of where it began the calendar year. This speaks to the sideways chop USD/JPY has been stuck in.

Within Elliott Wave Theory, this sideways chop is indicative of a corrective wave. Since registering a high in 2015, USD/JPY has slowly been correcting itself lower. It appears this downward correction is not complete and its possible we may see a breakdown below 104 and possibly 99.

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USD/JPY Current Elliott Wave

At large degree, the last completed wave is an ‘X’ wave triangle from 2016 to April 2019. Therefore, the next wave we are anticipating is a ‘Y’ wave lower. The ‘Y’ wave will likely take the form of an Elliott wave zigzag pattern. We will anticipate impulse waves moving lower, followed by corrective waves higher.

USDJPY elliott wave outlook for bearish trend.

There is enough evidence in place to suggest the corrective wave from August 2019 to December 26, 2019 is complete.

First, the reversal on December 26 occurred near the 61.8% retracement level of the previous down trend.

Secondly, since the December 26 high, we can see the structure of another bearish impulse wave on the intraday chart. We are anticipating USDJPY may press a little higher but hold below 109.69.

As a result, our Elliott wave analysis suggests we look for USD/JPY to press up to 108.50-109.25 with a bearish reversal occurring near this price zone while holding below 109.69. We can dial in the bearish targets once this upward correction finalizes. Generally speaking, bearish targets would include 107.25 and 106.50 with possibly lower levels in play.

USDJPY intraday chart with elliott wave labels.

See additional commentary on USD/JPY at the 51:50 to 55:25 mark of this recent Elliott Wave webinar.

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---Written by Jeremy Wagner, CEWA-M

Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy’s Elliott Wave reports via his bio page.

Join Jeremy in his live US Opening Bell webinar where these markets and more are discussed through Elliott wave theory.

Learn more on Elliott wave including the rules and guidelines by grabbing these beginners and advanced Elliott Wave trading guides.

Follow Jeremy on Twitter at @JWagnerFXTrader .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.