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USDJPY Pattern Makes More Sense than Politics

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

The last two weeks were different like night and day for USDJPY traders. The pair fell from 108.47 to 106.48 during the first three days of October and eventually closed the week in negative territory. The last five trading days, on the other hand, told a much different story.

Last week, USDJPY rose from 106.66 to 108.63 before closing the session at 108.43 for a total gain of 177 pips. There have been plenty of economic and political news in the past two weeks. The never ending Brexit saga and new developments around the US-China trade war, to name a few.

And while we didn’t even try to predict the outcome of the negotiations on these two fronts, we gave our best shot at forecasting USDJPY’s path. With the help of Elliott Wave analysis, the pair’s intentions turned out to be much clearer than Trump’s or Boris Johnson’s.

USDJPY Chooses Elliott Wave over Politics

Our subscribers received the following chart as a short-term update on Wednesday, October 2nd. It proves that one doesn’t need to keep track of any piece of news the media produces to stay ahead of the markets.

USDJPY five-wave impulse identified

The hourly chart of USDJPY revealed that the recovery from 104.45 was a five-wave impulse pattern. The Elliott Wave principle states that a three-wave correction in the other direction follows every impulse. Once the correction is over, the larger trend resumes in the direction of the impulsive sequence.

Knowing these rules made things a lot easier. The logical conclusion was that “a three-wave decline … towards the support area of wave iv near 107.00-106.80 can be expected before the uptrend resumes.” The updated chart below shows how USDJPY looks like ahead of the new week.

USDJPY makes an Elliott Wave bounce off 106.50

On October 3rd, the exchange rate was already down to 106.50. The decline was much faster than we initially expected, prompting us to change the count a little. The overall outlook, however, didn’t change at all. There still was a five-wave impulse to the upside, so it still made sense to expect the bulls to return.

Eight days later, on October 11th, USDJPY climbed to an intraday high of 108.63. The top of wave v has been exceeded, which was the minimum requirement for this setup to be called successful. What political and economic news the new week is going to bring remains to be seen. All we know is that tracking Elliott Wave patterns makes more sense than tracking the global political landscape.

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



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