Talking Points

-Elliott Wave Theory can provide clues to our location within the USDJPY trend

- USDJPY continues climbing higher in 5 th of 5 th wave

- Daily chart shows wave relationships and reaction level in the 119 handle

USDJPY Daily

(Created using FXCM’s Marketscope 2.0 charts)

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Fibonacci Wave Ratio Analysis

• Green wave 5 projects to 119.54 (green waves 1-3 times .618)
• Within green 5, red wave 5 projects to 119.81
• Intraday charts appear to be unwinding a series of wave 4 and 5’s (see video)

Bottom line, look for near term trends to finish off the larger picture wave 5 of 5. A shorter term trader can look to buy dips near 117.50-118.00 in anticipation of a smaller degree wave 5 towards 119.50

119.54-119.81 appears to be a point of attraction. This does not mean we want to short at those prices . This means the probability of a strong reaction lower is elevated if prices dig into the 119 handle.

If the longer term labeling is correct, then if a correction unfolds, dips could run for several weeks and retrace several hundred pips. The green 4th wave territory would provide longer term support should a dip develop that deep.

Suggested Reading: USD/JPY Year-End Surprise?

Looking for strategies to trade USDJPY on breakouts higher? Need a strategy to capture the USDJPY shifting sentiment which typically comes near market turns? Check out the Plus Breakout2 and Momentum2 strategies in Mirror trader .

Good luck!

---Written by Jeremy Wagner, Head Trading Instructor, EDU

Follow me on Twitter at @JWagnerFXTrader .

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This article uses Fibonacci ratios to follow a pattern. To learn more about Fibonacci retracement ratios, register and take this free 20 minute on demand course. Register here .