close icon

Solving USDJPY Riddles with Elliott Wave Hints

Unlike the stock market, where a profitable company with a growing market share will eventually grow in value in the long-term, the Forex market can be a real riddle. Macroeconomic, political and country-specific factors are fighting for influence over currency rates in the $5-trillion-a-day market. USDJPY is one of the most closely followed pairs as it pitches the currencies of the first and the third biggest economies in the world against one another.

USDJPY was a disappointment for the bulls last week. After opening at 112.54, the pair fell to as low as 111.38 before closing at 111.89 on Friday. A week earlier, it reached 112.89, following a recovery from 111.62. The ongoing trade war between the U.S. and China as well as the sharp declines in major stock markets around the world are among the usual reasons the financial media explains everything with these days, including USDJPY’s behavior.

We take a different approach, which allows us to anticipate future price swings, instead of just explaining them after the fact. It is called Elliott Wave analysis and it put us several days ahead of USDJPY’s recent developments. Here is how.
Elliott wave forecast USDJPY chart
This chart, sent to subscribers as a Wednesday update on October 17th, allowed us to identify a textbook five-wave impulse to the south between 114.55 and 111.62. It is labeled 1-2-3-4-5 in wave (1/A), where the sub-waves of wave 3 and wave (v) of 3 are also clearly visible. Wave 4 was a contracting triangle.

According to the Elliott Wave theory, impulses point in the direction in which the larger sequence is moving, but are followed by a three-wave correction in the opposite direction first.

In other words, a recovery to roughly 113.00 in wave (2/B) was supposed to occur, before the bears return to drag USDJPY to a new low in wave (3/C). The updated chart below show what happened next.
Updated USDJPY Elliott Wave outlook
USDJPY climbed to 112.89 in wave “c” of (2/B) on October 22nd. From then on, the pair started making lower lows and lower highs until it breached the bottom of wave (1/A) and fell to 111.38 on October 26th.

Elliott Wave analysis removes the need most traders have, namely to constantly follow external factors such as political and economic news and events. The Forex market really is a riddle, but you can still solve it and get the reward, if you know what to look for.

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



Stay informed with our newsletter

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

Privacy policy
You may also like:

NZDUSD Fibonacci Bounce Causes Optimism

At the start of December, 2018, NZDUSD almost reached 0.6970. A month later, the “flash crash” which brought chaos to many other Forex pairs, dragged the New Zealand dollar to 0.6586 on January 2nd, 2019. As of this writing, NZDUSD is hovering around 0.6760 and the bulls are probably wondering whether this is a chance…

Read More »

GBPNZD ‘s Elliott Wave Recovery Far from Over

A month ago we shared our view that despite being long-term bearish on GBPNZD, we thought it was time for a notable recovery. While the pair was hovering around 1.8400, the market was sending a message that a recovery to roughly 1.9000 was around the corner. As always, this message had nothing to do with…

Read More »

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…

Read More »

GBPAUD Recovery Interrupts Larger Downtrend

Life has been tough on GBPAUD bulls recently. The pair reached a two-year high of 1.8733 on October 11th, but failed to maintain the uptrend. On December 3rd, the Pound fell to 1.7210 against the Australian dollar – a crash of over 1500 pips in less than two months. As of this writing, the pair…

Read More »

GBPNZD: Support Ahead, Downtrend Still in Progress

On November 2nd, GBPNZD was trading above 1.9550. As of this writing, the pair is hovering slightly below 1.8400, meaning the British pound lost over 1150 pips against the New Zealand dollar in a single month. Fortunately, the Elliott Wave Principle put traders ahead of this sharp selloff. The chart below, published on November 5th,…

Read More »

EURNZD Bulls Look Better Going into December

Yesterday, we shared our view that despite being down by over 460 pips this month, a bullish reversal can be expected in EURAUD around 1.5500. Now, we are going to take a look at EURNZD, which lost even more in November. The pair plunged from 1.7359 to 1.6515 in the last thirty days, following a…

Read More »

EURAUD Bears Getting Tired. Bullish Reversal Ahead?

With only one day left, the Euro seems poised to end November in positive territory against the U.S. dollar, following a sharp decline in October. Unfortunately for the bulls, the European currency is still losing to some of its other rivals this month. EURAUD, for example, is down by over 460 pips since the start…

Read More »

More analyses