Monday, 14 May 2012

USDJPY, Monday May 14, 2012

Hi Traders,

Sorry for disappearing for 2 weeks but I have been pretty busy.

Here is my analysis of the USDJPY. There's in incoming setup you don't want to miss out. But ... don't rush: you're plenty of time.

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In the Monthly chart below the USDJPY completed a 5-3-9 (according to my wave Elliott wave connotation). This means that it's now reversing up to a possible tartget of 94.000 and 98.500

This is confirmed by an engulfing pattern - at the very bottom right - followed by a new little uptrend marked 1 and 2 - in white.

It's hard to figure out the extension of this uptrend: it could be a 1-2-3 up (also named a retracement Xwave up) or even a 1-2-3-4-5 up (making this the very start of a new trend up).

So far we assume the first hypothesis for good, (only 1-2-3 up) given that this is all part of a huge down trend started in 1949. Hence, we expect only an Xwave up. In the best case scenario this could run up to 101.00.

In the worst case scenario, the downtrend will resume at 94.00.






The weekly chart below shows that the little 1-2 of the monthly chart is actually 1-2-3-4 within a channel (in turquoise).

Hence we expect the 5th wave up and then a little reverse down.






 This is confirmed by the daily chart below which also shows that:
  • both retracement waves (wave 2 and wave 4 in turquoise) are structured in seven waves,
  • wave 4 is not completed. The little wave 7 down (in red) is still missing,
  • with the completion of wave 7 the channel will be touched 4 times,
  • we're hoping for the chart to bounce back as soon as it touches the channel.





The 4hour chart  below  shows that the wave 6 is actually a retracement X-wave (only 1-2-3 up).

We expect a 3 wave down or a 5 wave down. These waves will be very short waves.

Note the stochastic in negative divergence signalling the incumbent - very last - downtrend.








 There's a surprise in the 1hour chart below:  the very last leg up of  wave 5 is missing.

Therefore, the X-wave of the 4hour chart is not completed yet.


It will probably unfold to the upside, touch level 80.200 and maybe reach the upper boundary of the small channel.

Then down to complete wave 7 of the daily chart. 









All the above confirmed by the 30min chart  below. See the chart touching the channel only 3 times (out of 4). See also the completion of only 4 waves up (in turquoise) out of 5.








Conclusion:

The USDJPY will rally a bit to complete the 5th wave in the 4 hour chart and then down to complete wave 7 of the daily chart. That will be your first entry point for our long position, provided that there will be a reversal candlestick

No reversal candlestick? No trade

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