FX.co ★ USD/JPY wave analysis for January 24, 2013

USD/JPY Elliott Wave
Since our last analysis the USD/JPY pair was trading upward, corrective (B) wave (coloured red) of the bigger 4 wave (coloured purple) was developing. Yesterday during the Asian and European sessions we could observe ascending movement from 88.05 toward the 88.73 level. Therefore, during the New York session this major pair continued trading in a bullish mood and the price reached 2-day high at 89.30 level. Currently the USD/JPY pair is trading around 78.6% of the BvsA and we are expecting to see big drop today when final C waves (coloured red) starts. 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 87.64 (100% of wave A). To reduce the risk, we can use invalidation at 90.24 level as stop loss.

Support and Resistance
(S3) 87.75 (S2) 88.03 (S1) 88.20 (PP) 88.48 (R1) 88.76 (R2) 88.93 (R3) 89.21

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movement. That is why short positions at level 89.70 with stop loss 90.24 and take profit at 87.64 are recommended.