USD/JPY Wave Relationships Near 119.50
-Elliott Wave Theory can provide clues to our location within the USDJPY trend
-USDJPY continues climbing higher in 5th of 5th wave
-Daily chart shows wave relationships and reaction level in the 119 handle
(Created using FXCM’s Marketscope 2.0 charts)
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Fibonacci Wave Ratio Analysis
- Green wave 5 projects to 119.54 (green waves 1-3 times .618)
- Within green 5, red wave 5 projects to 119.81
- Intraday charts appear to be unwinding a series of wave 4 and 5’s (see video)
Bottom line, look for near term trends to finish off the larger picture wave 5 of 5. A shorter term trader can look to buy dips near 117.50-118.00 in anticipation of a smaller degree wave 5 towards 119.50
119.54-119.81 appears to be a point of attraction. This does not mean we want to short at those prices. This means the probability of a strong reaction lower is elevated if prices dig into the 119 handle.
If the longer term labeling is correct, then if a correction unfolds, dips could run for several weeks and retrace several hundred pips. The green 4th wave territory would provide longer term support should a dip develop that deep.
Suggested Reading: USD/JPY Year-End Surprise?
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---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU
Follow me on Twitter at @JWagnerFXTrader .
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This article uses Fibonacci ratios to follow a pattern. To learn more about Fibonacci retracement ratios, register and take this free 20 minute on demand course. Register here.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.