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USD/JPY Shallow Wave-4 Correction Indicates Bullish Targets At 110

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Technical analysis of Forex market
  • USD/JPY is creating a sideways correction after a massive impulse upwards (blue arrow). The bulls are expected to push price action even higher.
  • The USD/JPY bullish momentum is probably a wave 3 (grey). The strong AO (awesome oscillator) and ecs.MACD bars are typical for such an impulse.
  • On the 1 hour chart, the wave 4 (grey) could soon be completed because price action is finishing an ABC (green) correction.

This article examines the potential breakout and targets.

Price charts and technical analysis

The USD/JPY bullish momentum is probably a wave 3 (grey). The strong AO (awesome oscillator) and ecs.MACD bars are typical for such an impulse.

  1. The sideways correction makes a wave 3 pattern more likely, because it confirms a potential wave 4 pattern (grey).
  2. Waves 4 are usually shallow and choppy. The current wave 4 seems to be a sideways range.
  3. A bullish breakout (green arrows) above the resistance (orange lines) could confirm the bullish continuation in wave 5 (grey).
  4. More upside is possible if price action is indeed in a wave 3 (pink) of wave 3 (purple).
  5. A bearish breakout below the zone (green line) could indicate a deeper pullback (orange dotted arrow). In that case, the long-term 144 moving average should stop price and create a new bounce up (green dotted arrow).
  6. Only a deeper retracement places the uptrend on hold (yellow button) or invalidates it (red circle).

On the 1 hour chart, the wave 4 (grey) could soon be completed because price action is finishing an ABC (green) correction.

  1. The wave 4 (grey) is respecting the 23.6% Fibonacci level of the wave 3 (grey).
  2. A bearish breakout below the support is aiming for the 38.2% Fibonacci retracement level.
  3. The 38.2% (and 50%) Fib are support levels which could create a bullish bounce (dotted green arrows).
  4. Only a deeper breakout places the uptrend view in danger (yellow and red circles).
  5. The immediate target for the wave 5 (grey) is the round level of 110. The second target is located at 111, which is the -1.618% Fib target of the 4 hour chart.