USDJPY might have carved a meaningful bottom around 104.20 levels, as expected and discussed earlier. The currency seems to be in control of bulls and is looking to target above 107.85 mark in the near term. Looking bullish going forward.
USDJPY probable wave counts are as follows: The rally between 101.18 through 111.75 has been labelled as potential Wave (1) at a larger degree (not seen here). An impulse is usually followed by a correction. The drop between 111.75 and 104.20 seems to be corrective.
The above correction has been labelled as A-B-C on the chart and potential Wave (2) termination around 104.20 mark. If the above proposed structure holds well, USDJPY should stay above 104.20 and proceed towards 107.85 and 110.00 levels, going forward.
Also note that the corrective drop had managed to reach through fibonacci 0.618 retracement of earlier rally between 101.18 and 111.75 respectively. Prices have bounced from just below the 105.20 mark, the fibonacci 0.618 levels discussed above.
Ideally USDJPY should reach 108.00 levels over the next few trading sessions, taking out resistance around 107.85 respectively. We can expect a corrective drop thereafter, before the rally could continue towards the 110.00 mark.
Traders might be inclined to hold on to the long positions taken after 104.20 lows earlier. We might witness some profit bookings around 107.85/108.00 levels, but support should come in soon to push through the 110.00 mark.
Technical Analysis Team
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