Guest Commentary: Hourly USDJPY - Increased Volatility Warns of Consol Break!
* Look to sell USDJPY upside reactions into natural 50 to 61.8 percent resistance against the 79.20 peak.
In Elliott Wave analysis a five wave move signifies the direction of the trend. Thus it is a very rare occurrence to see back to back to back trend sequences or impulse moves. In fact, one of the only formations this can occur is at the very end of an irregular flat pattern. As a refresher, an irregular consolidation occurs in an over-whelming bearish or bullish positions when the intermediate B wave breaks to new lows or new highs.
As we have been highlighting on the Daily chart we suspect the longstanding 77.65 to 80.60 consolidation pattern is breaking lower. We suspect the five wave decline from the interim 79.05 peak is the minor C wave of an irregular flat pattern to end the B wave low.
Thus the relatively aggressive rally to 79.20 in an impulse format is the exhaustive C leg of the pattern. That would then explain the strong decline to thus far find 78.2 support as the start of a larger downtrend sequence to attack the medium term 75.55 low.
Under the assumption we hold initial 78.00 support, look to sell upside reactions into natural 50 to 61.8 percent resistance against the 79.20 peak. Over this level suggests we are again premature in the bearish view for an extension back to 80.05 before the downtrend begins.
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