FX.co ★ USD/JPY wave analysis for January 21, 2013

USD/JPY Elliott Wave

Since our last analysis the USD/JPY pair has traded upward, impulsive (5) wave (coloured red) of the bigger 3 wave (coloured purple) has developed. From the Friday's European session all the way to the New York session we could observe ascending movement from 89.68 toward the 90.23 level and we can consider this move as the end of diagonal in the (5) wave (coloured green) of the bigger (5) wave (coloured red). Today during the early Asian session this major pair has started declining from recent highs; it indicates the beginning of the 4 wave (coloured purple). In accordance with our wave rules and taking into account that the wave 4 should retrace 38.2% of the wave 3, we can define the potential targets with measuring wave 3 with take profit at 85.23 (38.2% of wave 3). To reduce the risk, we can use invalidation at 90.24 level as stop loss.

Support and Resistance
(S3) 89.14 (S2) 89.38 (S1) 89.72 (PP) 89.96 (R1) 90.30 (R2) 90.54 (R3) 90.88

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 89.40 with stop loss 90.24 and take profit at 85.23 are recommended.