close icon

Trump Didn’t Drag USDJPY Down. Elliott Wave Did

USDJPY plunged sharply last week after President Trump’s latest China tariff threats. The pair reached a high of 109.32 on Wednesday, July 31st, but finished the week below 106.60 on Friday.

However, just because something happens after something else, it doesn’t mean there is causation between the two. In USDJPY’s case, the stage was set for a notable decline long before Trump’s latest tweetstorm. The chart below, sent to our subscribers more than a week earlier, on July 24th, proves it.

USDJPY Elliott Wave cycle in the making on July 24th

The 4h chart of USDJPY revealed that the structure of the decline from 112.40 to 106.78 was impulsive. According to the Elliott Wave theory, a three-wave correction in the opposite direction follows every impulse. Therefore, we thought, once the corresponding corrective recovery ended, the larger downtrend in USDJPY was supposed to resume.

The pair was hovering around 108.00 at the time. It appeared the correction was unfolding as a w-x-y double zigzag. Wave ‘y’ was still in progress so a new swing high above the end of wave ‘w’ had to occur, before the bears return.

Regardless of the presence or absence of a specific catalyst, the Elliott Wave logic dictated that lower levels should soon be expected in USDJPY. Then, Trump threatened to impose new tariffs on $300 billion worth of Chinese goods.

USDJPY crashes after Trump's new tariff threats

The habit of the financial markets is to anticipate the news, not to follow it. The mood of the market is the real cause behind the next swing, not the piece of external information the media would later use to explain what happened. Mood which is best understood via repetitive Elliott Wave patterns.

Explaining everything after the fact is simply not enough. Successful traders stay ahead of the news and that is where Elliott Wave analysis really helps.

What will USDJPY bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

GBPNZD Falls as No-Deal Brexit Looms

The possibility of a no-deal Brexit received another boost after Boris Johnson became Prime Minister of the UK. The market, however, doesn’t seem to like those prospects. The Pound Sterling has been losing ground against the Euro, the Aussie, the US dollar and other rival currencies. GBPNZD is down, too. Less than three months ago,…

Read More »

USDCNH Looks Bearish in the Midst of a Trade War

Less than a month ago USDCNH rose to 6.9621 and it looked like reaching a new multi-year high above 7.0000 was only a matter of time. Unfortunately for the bulls the market chose otherwise. USDCNH fell to 6.8164 on the last day of June. As of this writing, the pair is hovering around 6.8755 following…

Read More »

USDCHF Bears in Charge. Time for a New Key Level

On May 30th USDCHF was trading near 1.0100 in an attempt to recover from a decline from 1.0238 to 1.0009. The bulls had managed to add more than 90 pips and seemed determined to get the job done. Unfortunately for them, there was an Elliott Wave pattern suggesting their efforts were most likely going to…

Read More »

EURUSD Bulls Needed a Catalyst. Mr. Powell Obliged

EURUSD was trading near 1.1170 at the start of last week. The pair was close to levels last seen two years ago and most expected the slide to continue. But then, on June 4th, Fed Chairman Jerome Powell implied the Central Bank is considering interest rate cuts in response to trade issues. By Friday, June…

Read More »

USDCHF Elliott Wave Pattern and a Key Level to Watch

The Swiss franc was among the very few currencies that managed to stand their ground against the U.S dollar in May. USDCHF reached 1.0238 in late-April. The last time the pair traded this high was in January 2017, two and a half years ago. Unfortunately for the bulls, a 230-pip decline dragged the rate back…

Read More »

USDTRY – Is 8.0000 the Bulls’ Ultimate Target?

The U.S. dollar has been on a tear since the Financial crisis, rising against rivals both big and small. One currency that was hit especially hard is the Turkish lira. USDTRY was down to less than 1.1500 in 2008. Ten years later, in August 2018, it slightly breached 7.1500. Political and macroeconomic factors have certainly…

Read More »

USDCNH Before and After Trump’s Tariff Threat

The negotiations between the two biggest economies are not going as well as investors hoped. Stock market indices are down across the board following President Trump’s new China tariff threat. Another side-effect was the sharp rally to over 6.82 in USDCNH. And while Trump’s tweet about China did, indeed, trigger the surge, the actual reason…

Read More »

More analyses