USDJPY started this week in the same tone as it finished the previous one. Last Friday, April 15th, the pair touched 109.73 only to close the day at 108.71. But on Monday things got even worse for the bulls, since USDJPY opened with a large gap to the south at 108.16. And just as everyone thought the larger downtrend has resumed, the pair found support at 107.83 and has been rallying ever since. Currently, the dollar is hovering around 110.50 against the yen. But these numbers will not tells us anything else. The real question is could this week’s developments in USDJPY be predicted or not? And if yes – how?
There is probably more than one way to do the task, but ours requires nothing more than a chart and the Elliott Wave Principle. The chart below was sent to our premium clients before the market opened on Monday, April 18th.(some of the marks have been removed for this article)
As visible, we assumed USDJPY could extend lower, but the bottom at 107.63 had to hold and a significant recovery was supposed to follow. The conclusion the analysis our premium clients received on Monday, suggested that “as long as 107.63 holds, chances are we are going to see 110.00 tested, at least.” In other words, the Wave principle not only gave us a hint about the market’s future direction, but also provided us with a specific invalidation level, which, is breached, would have indicated that we were wrong. Today is Friday and the week is almost over, so let’s see an updated chart of USDJPY.
When the market opened on Monday, things were not looking so good for the bulls, but with 107.63 in tact, all they needed to do is wait. Patience is a virtue, but so is self-discipline. The exchange rate seemed to be going after our stop-loss level, but it never got it. Instead, USDJPY regained positive bias and managed to climb to 110.74 so far as of today.
Despite its high rate of success, just as all other analytical methods, the Elliott Wave Principle is not flawless. There are no guarantees in the markets. But one of its most valuable characteristics is that it admits it could be wrong and usually provides specific critical levels to indicate so, in case it is. And as long as they hold, chances are still in the trader’s favor.
What to expect from now on? What is the bigger picture saying? Is USDJPY going to continue even higher or the resistance near 110.70 would turn out to be too strong for the bulls to breach? Prepare yourself for whatever is coming. Order your on demand Elliott Wave analysis now or pre-order the one due out next Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.
