“If this is the correct count, we should expect a recovery, which could take USDJPY up to the 120s again.” This is the last sentence of a forecast, called “USDJPY: Bulls May Be Ready to Return”, which we published 7 days ago, on December 16th. After a 600 pips of decline, the wave structure gave us a hint, that the zone of 115.50 may provide a strong support. The chart below shows our bullish idea as it was back then.
Well, this turned out to be the correct count. The USDJPY forex pair did bottom at 115.55 and is trading slightly above 120 as of today. This situation is another great example of the Elliott Wave Principle‘s ability to prepare you for upcoming reversals. The next chart illustrates just how accurate it could often be.
From an Elliott Wave point of view, there are two scenarios from now on. The first one says USDJPY would continue rising and we should expect a fresh new high above 121.83. The second one assumes the pair could still be in a larger sideways correction, a triangle for example. If this is the case, the exchange rate could stay trapped between 121.80 and 115.50 for a while.
