FX.co ★ USD/JPY wave analysis for January 17, 2013

USD/JPY Elliott Wave
Since our last analysis the USD/JPY pair has traded upward like we expected, corrective (B) wave (coloured red) of the bigger 4 wave (coloured purple) has developed. Yesterday during the European session and a half of the New York session we could observe strong ascending movement from 88.10 toward the 88.78 level. Therefore, during the second half of the New York session this major pair did not manage to hold this level and the price dropped to the 88.12 level. Today during the early Asian session we could observe one strong upward move toward the 89.39 level and we can consider this move as the end of the (B) wave. We expect to see price lower when development of the C wave (coloured red) start.In accordance with our wave rules and taking into account that the wave C should retrace 100% of the wave A, we can define the potential targets with measuring wave A with take profit at 87.36 (100% of wave A). To reduce the risk, we can use resistance at 89.66 level as stop loss.

Support and Resistance
(S3) 87.26 (S2) 87.67 (S1) 87.92 (PP) 88.34 (R1) 88.75 (R2) 89.00 (R3) 89.42

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 89.15 with stop loss 89.66 and take profit at 87.36 are recommended.