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USDJPY Recoil Rally On The Cards

Currencies / Japanese Yen Aug 23, 2017 - 11:59 AM GMT

By: Enda_Glynn


My Bias: LONG
Wave Structure: rally in wave [C]
Long term wave count: wave [C] is underway, upside to above 136.00
Important risk events: JPY: N/A. USD: New Home Sales, Crude Oil Inventories.

So far the rise off support at 108.60 has been in three waves.
The price structure sits just above major support at 107.50,
if this market is going to turn up,
Which I think it will,
It has simply got to happen this week.

There is a clear bullish momentum divergence on the 4hr chart.
With a double bottom in place in RSI.
The price has spent the last 6 weeks in decline,
even though the larger wave form is still very bullish on the daily chart.

I get the feeling that this market is storing up a very large recoil rally,
Which could take the price above 118.60 in wave [iii] grey,
If this wave count proves correct.

For the next few days it is touch and go for the bullish setup.
But if there is a positive move into 111.05
followed by a corrective decline,
This will be the setup I have been waiting for.
108.60 must hold.

My Bias: market topping process ongoing
Wave Structure: Impulsive 5 wave structure, possibly topping in an all time high.
Long term wave count: Topping in wave (5)
Important risk events: USD: New Home Sales, Crude Oil Inventories.

The declines off the recent all time highs have so far traced out a three wave form.
Which does point to a corrective decline.

The rally of the recent low is best counted as a three wave move,
Which again points to a corrective rise in wave 'ii' pink.
The bearish wave count is still a very real probability from here.

On the 4hr chart,
Last weeks declines punched down through the 200MA,
Which is a general bearish warning sign.
and since then,
The price has rebounded into the large rising trend channel,
which should offer resistance.

The daily RSI has now given a momentum sell signal
after a showing major divergence form the price for most of the year,
with successive lower highs.

At this point,
We have a bearish setup in Elliott waves, Momentum signals, and price action.
So this could get ugly.

For tomorrow;
Watch for signs turn down from todays highs in wave 'iii' pink.
A drop below wave 'b' will be the initial sign of a turn down.
22084 is the bearish invalidation line.

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Enda Glynn
I am an Elliott wave trader,
I have studied and traded using Elliott wave analysis as the backbone of my approach to markets for the last 10 years.
I take a top down approach to market analysis
starting at the daily time frame all the way down to the 30 minute time frame.

© 2017 Copyright Enda Glynn - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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