News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Wall Street
More View more
Real Time News
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.16% 🇨🇭CHF: 0.13% 🇨🇦CAD: 0.09% 🇦🇺AUD: 0.04% 🇬🇧GBP: 0.03% 🇳🇿NZD: -0.01% View the performance of all markets via
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 94.25%, while traders in NZD/USD are at opposite extremes with 75.59%. See the summary chart below and full details and charts on DailyFX:
  • All my Google autocompletes are now Thanksgiving related. This is making for some interesting suggested searches
  • Bok Governor Lee says action will be taken if herd behavior seen in FX market - BBG $KRWUSD
  • New Zealand Prime Minister Ardern says rising home prices not a plan for growth - BBG
  • Wall Street Futures Update: Dow Jones (+0.214%) S&P 500 (+0.262%) Nasdaq 100 (+0.440%) [delayed] -BBG
  • The Euro looks poised to continue gaining ground against haven-associated currencies and may reverse higher against the British Pound in the near term. Get your #Euro market update from @DanielGMoss here:
  • Sri Lankan central bank standing lending rate unchanged at 5.5%, standing deposit rate unchanged at 4.5%- BBG
  • US macro data were largely mixed overnight, with the initial jobless claims showing further weakness while durable goods orders beat expectations. The weekly jobless claim report registered 778k for the week ending Nov 21, marking a fifth-week high (chart below).
  • Singapore's Straits Times Index might be vulnerable to a technical pullback after rising more than 19% in November. An immediate support level can be found at 2,800.
Buy or Sell: USD/JPY Pivots Near Wave Relationships

Buy or Sell: USD/JPY Pivots Near Wave Relationships

2015-11-24 22:55:00
Jeremy Wagner, CEWA-M, Head of Education

Talking Points

-November 18 top came near several wave relationships

-Bears can sell rallies in anticipation of a 118 retest

-Bulls can use 121.50 as their invalidation point to wave 5 of an impulse

The USD/JPY technical pattern has caught my eye lately. A drop below 121.50 seals the October 15-November 18 trend as a three wave move which is significant for bears. However, the current price level could support a pivot higher so bulls have a good risk to reward ratio opportunity. From near current price levels, the USDJPY should tip its hand to us as to which pattern likely plays out.

Today, we will assess the bearish and bullish Elliott Wave possibilities that are potentially developing.

Buy or Sell: USD/JPY Pivots Near Wave Relationships

[Image 1]

Scenario #1 - Bearish 3 Wave Move

As we can see in the chart above, we have two clear 5 wave moves higher (red circle waves) that are nearly equal in length. The internal sub-waves conformed to several guidelines.

  • Wave c is nearly equal to wave a
  • Wave 3 of c is 2.618 * wave 1 of c
  • Wave 5 of c is .382 * wave 1-3 of c
  • Waves 2 and 4 of a alternate
  • Waves 2 of 4 of c alternate

Most importantly, the pivot on November 18 took place right in the zone of the confluence of wave measurements.

Under this interpretation, 121.50 is the key level to watch. If prices break below 121.50, then it seals the October 15 up trend as a 3 wave move. According to Elliott Wave Theory, 3 wave moves take place in the corrective position OR in the ending diagonal patterns. If 121.50 breaks, we are leaning towards an eventual retest of 118.10

Scenario #2 - Bullish Wave v Coming

The bullish pattern we are watching is that this current dip is a smaller degree wave iv. 121.50 becomes the price level that if broken, invalidates this impulsive pattern.

Buy or Sell: USD/JPY Pivots Near Wave Relationships

[Image 2]

Typically, wave iv’s will retrace approximately 38.2% of wave iii. In this case, today’s low of 122.31 may be the end of wave iv. Additionally, you’ll see on the chart above how the grey line also intersects in this same price zone.

Lastly, in looking for alternation with the proposed wave ii, which means we can anticipate a triangle or flat pattern developing. Either way, prices are likely to retest the 123.75 high in the coming days under this pattern and possibly higher.

Once the wave iv finishes, we can then anticipate a wave v through a couple of measurements. Since neither wave i or iii was extended, we can anticipate v to be larger than iii. Wave iii is about 350 pips, so wave 5 could travel 350-550 pips which targets 125.80. The 61.8% of waves i-iii also appears in the 125.80 zone. If prices reach this level, a reaction lower is likely.

Regardless of how you decide to trade USD/JPY, consider this one simple technique that when implemented, 53% of the traders turned a profit; of those who didn’t, only 17% turned a profit. Read pages 7-9 of the Traits of Successful Traders Guide to discover this technique. [Free registration required]

Happy trading!

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

To receive additional articles from Jeremy via email, join Jeremy’s distribution list.

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