FX.co ★ USD/JPY Wave analysis for January 23, 2013

USD/JPY Elliott Wave
For the last few days the USD/JPY pair was trading downward, impulsive (3) wave (coloured green) of the bigger (A) wave (coloured red) was developing. Yesterday during the early Asian session we could observe strong descending movement from 89.35 toward the 88.35 level. Therefore, during the European session this major pair did not manage to hold this level and the price started pushing higher reaching a new session’s high at 88.97. After negative market data had come from U.S. the USD/JPY pair started pushing lower and this major pair finished yesterday’s session few pips above daily low. Today we could observe that price started reversing at the 89.05 level and we can consider this move as the end of the (3) wave (coloured green). 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 88.84 (38.2% of wave 3). To reduce the risk, we can use invalidation at 88.05 level as stop loss.

Support and Resistance
(S3) 87.29 (S2) 87.96 (S1) 88.38 (PP) 89.06 (R1) 89.73 (R2) 90.15 (R3) 90.83

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the upward movement. That is why long positions at level 88.40 with stop loss 88.05 and take profit at 88.84 are recommended.