Wave dimension analysis:
Friday’s USD/JPY trading was highly volatile, as a result the price managed to test the 77/30 level and drop by 35 b.p. from the reached high. At the same time this local high seems to be the top of the dynamically formed 5-wave structure of the 1st wave (or a) of a more continuous upside section. If so, the pair might resume growth from the Friday’s close levels or slightly lower.
Targets for the option with the wave 2 or b:
76,94 – Fibonacci 76,4%
76,74 – Fibonacci 88,6%
Targets for the option with the wave 3 or c:
77,39 – Fibonacci 50,0%
77,59 – Fibonacci 38,2%
General conclusion and trading recommendations:
Current movement is getting the shape of a 5-wave formation of possibly a new trend upside section. If this assumption is correct, we have all chances to see the pair advance to 77.39 (50,0% Fibonacci) and 77.59 (38,2% Fibonacci). However from the viewpoint of wave analysis it is difficult to forecast the events in the long term, as well as to define waves for the medium term. The pair did not manage to fixate below 76.55, therefore the upside movement is in advance now. Strong growth and maximum highs of the MACD demonstrate possible correction, which can coincide with the wave 2 or b being observed on a micro level.
