USDJPY Structure Remains Bearish Below 109.85

15 July 2020

USDJPY has managed to push through 107.50 levels until now. Potential remains for a push towards 108.30/40 levels before reversing lower again. Also note that interim resistance stays around 109.85 and structure remains bearish below that.

Let us look at the larger degree potential wave counts first. USDJPY had earlier dropped between 112.22 and 101.18 in Feb-March 2020. It is not seen here, but the drop was an impulse wave labelled as Wave (1).

An impulse wave is followed by a corrective wave (3 waves) in the opposite direction, and USDJPY rallied from 101.18 through 111.75 in 3 waves (not seen here). If the above larger degree wave counts hold well, USDJPY should stay below 111.75 and drag lower towards 101.18.

The lower degree potential wave counts since 111.75 are as follows: The drop from 111.75 through 106.00 was an impulse, hence labelled as Wave 1. The subsequent rally had reached fibonacci 0.618 retracement of the above drop towards 109.85 levels, marked as Wave 2.

If the above lower degree counts are correct, USDJPY is progressing in Wave 3 since 109.85 levels, and could terminate below 106.00 going further. Going further, the recent boundary which is being worked upon is between 109.85 and 106.00 respectively.

A corrective rally towards 108.30 remains possible since it is the fibonacci 0.618 retracement of the above drop. High probability remains for a bearish reversal if prices manage to reach 10830 mark. Only a break above 109.85 would change the existing bearish structure.

Prepared by
Technical Analysis Team

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