USDJPY Potential Support Zone Is Around 104.00/105.00

29 July 2020

USDJPY might be close to a potential bottom formation around 105.00 levels. The currency might also drop towards 104.00 before bouncing higher since the Elliott Channel support is seen to be passing through the above levels.

USDJPY probable wave counts are as follows: The drop from 112.22 through 101.18 could be a larger degree Wave (1), which is not seen on the chart here. The impulse drop was followed by a rally towards 111.75, labelled as potential Wave (2).

If the above counts hold well, USDJPY might be unfolding a similar degree Wave (3), which should ideally end up below 101.18. Going further, USDJPY seems to have carved lower degree Waves 1 and 2 around 106.00 and 109.85 respectively.

Since the 109.85 highs, USDJPY has been unfolding Wave 3 within the higher degree Wave (3) as discussed above. If the above lower degree counts hold well, the currency would be seen well below 103.00 levels in near future.

Alternately, the drop from 111.75 through 104.95, could be seen as corrective until now. They are co-labelled as Waves A-B-C around 106.00, 109.85 and 104.95 respectively. Also note that 105.00 is fibonacci 0.618 support of the rally between 101.18 and 111.75 respectively.

If the alternate count works out well, USDJPY should turn higher from here. A push above 108.15 resistance would confirm that a meaningful bottom is in place just below 105.00 level. Traders might be preparing to go long from current levels.

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