USD/JPY Elliott Wave Analysis

Despite rebounding to 101.79 initially last week, as the greenback met renewed selling interest there and has fallen again, suggesting near term downside risk remains and marginal weakness below this month's low at 101.07 cannot be ruled out, however, only a drop below indicated support at 100.76-82 would justify our count that the wave c of major correction from 105.44 (wave V top) has commenced for retracement of early upmove to psychological support at 100.00 but reckon previous support at 99.57 would hold from on first testing.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding for gain towards 107.00 level.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5 to previous chart resistance at 107.00-10 but reckon price would falter below 110.00.

On the upside, whilst recovery to 101.60 cannot be ruled out, said resistance at 101.79 should cap upside and bring another decline. Only above resistance area at 102.27-35 would signa fall from 102.80 has ended and bring another test of this level, above there would extend the rebound from 100.82 to previous resistance at 103.02, break there would signal the fall from 104.13 has ended at 100.82 and encourage for gain to 103.75-80 but said resistance at 104.13 should hold from here. In the event dollar rises above resistance at 104.13, this would extend the rebound from 100.76 to 104.50-60 but reckon upside would be limited to strong resistance at 104.92 and bring another fall. Only a sustained breach above 105.00 would shift risk to upside for a retest of 105.44, break there would extend medium term upmove from record low of 75.31 in wave v to 105.90-00, then towards 107.00-05 (50% projection of 77.14-103.74 measuring from 93.75) but reckon upside would be limited to 108.00 and price should falter well below 110.15-20 (61.8% projection).

Recommendation: Stand aside for this week.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to 107.00 and possibly 110.00 would be seen.