USD/JPY has risen to above 111.84 as anticipated. We previously wrote,“…the price action near 111.84 will tip the hand as to whether the near term sell off is over and the resumption of the uptrend proceeds or if the downtrend will continue lower.”
Now that we are able to review the shape and structure of the recovery to 111.84, we can better assess the higher probability move.
The Elliott Wave model points to 113.12 as the key level to watch. So long as USDJPY is below 113.12, then the pair is vulnerable to retest 110.60 and possibly lower levels. The pivot may have already occurred to drive the pair lower.
If prices do punch above 113.12, then it opens the door to several different patterns. Many of those patterns suggest a test of 113.50 with one pattern suggesting the start of a strong bull trend.
Bottom line, USD/JPY is vulnerable to continued weakness towards 110.60 so long as prices are below 113.12.
IG Client Sentiment shows traders have been shifting net long over the past 24 hours pushing the sentiment reading to +1.68. A shift towards net longs on increasing price is a bearish undertone. Therefore, sentiment lines up with the Elliott Wave model suggesting a continuation of the previous sell off. Learn how to trade with sentiment with our IG client sentiment guide.
Do you find USD/JPY movements confusing? Read our Japanese Yen quarterly forecast.
---Written by Jeremy Wagner, CEWA-M
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EUR/USD has been ripping lately. Read more on the EURUSD Elliott Wave picture.
Read the recent Dow Jones Elliott Wave article.
