On December 10th, 2014, we published an article, called “What To Expect From USDJPY In 2015?”. In that material we suggested that USDJPY is currently in wave 4 (orange) of 3 of (5). Here is how that forecast looked like seven months ago.
Almost a month and a half later, on January 21st, 2015, the pair revealed its intentions to shape that fourth wave as a triangle. That is why we posted “USDJPY Locked In A Triangle?”, saying that “USDJPY should resume its uptrend as soon as the correction is over. Targets around 123.00 look highly probable”. In May 2015, the USDJPY exchange rate not only reached the 123.00 target, but exceeded it by a large margin. On May 31st, 2015, the pair climbed to 125.85.
The first six months of the year are already behind us, so now seems to be a good time to see how the big picture looks like.
As visible, everything is going according to plan so far. Wave 3 of (5) ended at 125.85. We believe the decline, which followed and is still in progress, is part of wave 4 of (5). Fourth waves typically retrace back to the zone where a previous fourth wave has ended. In other words, USDJPY might lose another 400-500 pips in wave 4 of (5), before wave 5 of (5) to the upside begins. You might want to wait a while, before buying this dip.
