USDJPY holds well above its potential support around 104.20 mark. The currency is trading above 106.00 handle for now and might be preparing to push through initial resistance around 107.50 levels. Bulls might be looking to target 110.00 mark over the next several weeks.
USDJPY probable wave counts are as follows: The rally between 101.18 and 111.75 could be marked as larger degree Wave (1) or (A), not seen on the chart here. The subsequent drop towards 104.20 can be sub divided into 3 waves A-B-C on the chart here.
Also note that the corrective drop had reached just below the fibonacci 0.618 retracement of the above rally, Wave (1)/ (A). USDJPY has found support around the 104.00/20 zone and managed to rally through 107.00 levels recently.
Ideally, USDJPY should rally above 111.75 mark to complete a higher degree (A)-(B)-(C) rally. Alternately, the currency might test 104.20, in case a double zigzag is underway from 111.75 highs. Either way, probabilities remain high for a bullish reversal going forward.
Immediate price resistance is seen around 107.50, followed by 108.15, while support is intact around 104.20 respectively. A break above 107.50 would confirm that bulls are in control and USDJPY should be heading towards the next in-line resistance at 108.15/109.85 respectively.
Traders might be preparing to initiate long positions close to its support zone 104.50/105.50, with stop below 104.00 and potential targets above 109.85 respectively. Only a sustained break below 104.00 could change structure in the near term.
Technical Analysis Team
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