USD/JPY - 112.81
USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.
As the greenback ran into strong resistance at 115.51 earlier this month and has retreated sharply, suggesting top is formed there and consolidation with downside bias is seen for further fall to 112.00 but break there is needed to signal the rebound from 111.59 has ended, bring further fall towards this level. Looking ahead, dollar needs to penetrate indicated support at 111.36 to retain bearishness and extend the fall from 118.66 (2016 high) for retracement of recent upmove to 110.90-00, then 109.90-95 (50% Fibonacci retracement of 101.19-118.66) but downside should be limited to 109.50 and price should stay above 109.00, bring rebound later.
Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.
Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.
On the upside, whilst initial recovery to 113.40-50 cannot be ruled out, price should falter below 114.00 and bring another decline later. Above 114.45-50 would abort and prolong choppy trading, risk rebound to 115.00 but only;y break of indicated resistance at 115.51-62 would signal the erratic rise from 111.59 low is still in progress and may extend further gain to 116.00-10, break there would suggest the pullback from 118.66 has ended, then headway to resistance at 116.87 would follow. Looking ahead, a sustained break above there would signal early upmove has resumed for further gain to another previous resistance at 117.53 next.
Recommendation: Sell at 113.50 for 111.50 with stop above 114.50.
On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.