FX.co ★ USD/JPY Wave Analysis for January 14, 2013

USD/JPY Elliott Wave
Last week the USD/JPY pair was trading in the upward move, corrective (5) wave (coloured red) of the bigger 3 wave (coloured purple) was developing. During the Friday's Asian and European sessions we could observe strong ascending movement from 88.73 toward the 89.45 level. Therefore, during the New York session this major pair continued trading higher reaching a new high at 89.66 level and we can consider this move as the end of the 3 wave (coloured purple). At the moment the USD/JPY pair is trading around 89.37 level and we expect to see the price below 85.61 level soon. 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 85.61 (38.2% of wave 3). To reduce the risk, we can use end of the 3 wave at 89.66 level as stop loss.

Support and Resistance
(S3) 87.98 (S2) 88.33 (S1) 88.74 (PP) 89.09 (R1) 89.50 (R2) 89.85 (R3) 90.26

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 89.30 with stop loss 89.66 take profit at 85.61 are recommended.