close icon

USDJPY Crashes After Textbook Elliott Wave Setup

It is not just stock market investors and oil bulls, who have been suffering lately. The holidays do not promise to be very happy for USDJPY bulls, as well. The pair fell to 110.81 on Thursday, revisiting levels last seen in early September.

The Fed rate hike, the stock market crash and the tensions between USA and China were among the most notable reasons the media used to explain the USDJPY slump with. Unfortunately, after-the-fact explanations are of little value to traders and investors, who need to stay ahead of the market, in order to take advantage of it.

Elliott Wave analysis is our solution to this problem. It is a pattern recognition technique, discovered by Ralph Nelson Elliott in the 1930s, which is still applicable today, more than 80 years later. For example, several hours prior to the Fed’s rate hike on Wednesday, December 19th, we sent the following chart of USDJPY to subscribers.
USDJPY tumbles in Elliott Wave manner
This chart was accompanied by this paragraph: “USDJPY’s decline from 113.71 can be expected to evolve into a five-wave impulse. A new low, followed by a three-wave recovery to roughly 112.60 can expected before the downtrend resumes.

That was all. No politics, no economics and no news interpretations. Just the simple Elliott wave logic stating that a three-wave correction follows every impulse and then the larger trend resumes in the direction of the five-wave pattern. Since this was a 30-minute chart, it did not take too long for this setup to give results.
Elliott Wave chart reveals USDJPY selloff
USDJPY initially fell to 112.09 in wave “v”. Then, an a-b-c zigzag correction lifted the pair to 112.67 and completed the entire 5-3 wave cycle from 113.71. The stage was set for a plunge and the bears took advantage of the dollar’s vulnerability to drag it down to 110.81 versus the Japanese yen on December 20th.

The pair closed at 111.22 on Friday. We can guarantee you that whatever it does in the future, the financial media will find a way to explain it with a piece of news, an event or a statement by a public figure. But unless traders learn how to turn back time, there is no way to extract anything from it. With the help of the Elliott Wave principle, on the other hand, they do stand a chance.

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:

USDTRY Drop Accelerates as Elliott Wave Predicted

The Turkish Lira hit its highest level against the U.S. dollar in six months. The country economic and legal reforms announced last year coupled with tighter monetary policy appear to be giving the desired effect. USDTRY is down 19.3% from its November 2020 high after being in an uptrend since mid-2008. Most analyst, however, are…

Read More »

EURUSD Surges 570 Pips After Fibonacci Encounter

EURUSD is trading at levels last seen in April 2018, when it was on its way down to 1.0636 by March 2020. The pair is now approaching 1.2200, up 14.5% since the COVID-19 selloff nine months ago. But trends don’t move in a straight line. Two months ago, we showed you how Elliott Wave analysis…

Read More »

USDTRY Heads South After Central Bank Decision

Turkey finally took a decisive step towards taming the double-digit inflation, which has been destroying the Lira’s value for years. The country’s central bank lifted the benchmark interest rate to 15%, up 475 basis points from its previous standing. USDTRY fell as low as 7.5031 earlier today, on track for a second consecutive week of…

Read More »

GBPNZD Can Slide to Sub-1.9000 In Coming Weeks

What will EURUSD, USDJPY and USDCAD bring next week? That is the subject of discussion in our next premium analyses due out on Sunday! GBPNZD exceeded 2.0270 in mid-August, but the bulls could not keep the positive momentum. A month later, the pair fell to 1.9055, losing 6% in the process. And just when it…

Read More »

Ahead of EURUSD ‘s 280-pip Drop in September

EURUSD had been on a tear since mid-March when it bottomed out at 1.0636. Nearly six months later, on the first day of September, the pair exceeded the 1.2000 mark. The bulls seemed firmly in control and the Fed’s money printing suggested further losses ahead for the dollar. However, years of experience had taught us…

Read More »

Ahead of GBPUSD in Both Directions. Now What?

GBPUSD had a good run over the past six months, climbing from its 1.1412 March low to as high as 1.3483 last week. The pair is now back below 1.3000 after the latest portion of Brexit-related mess. Later in this article we will share our view of where the Pound is headed against the dollar,…

Read More »

USDTRY Set to Complete 12-Year Impulse Pattern

The U.S. dollar has been steadily climbing against the Turkish lira since 2008. Ten years later, in 2018, USDTRY reached 7.1500 on the back of geopolitical tensions and President Erdogan‘s reckless political decisions. In May 2019, however, the pair was down to 6.0600 and it looked like the Lira’s plunge might be finally over. Unfortunately,…

Read More »

More analyses