USDJPY might have set the stage to rally past 110.00 levels in the next several weeks to come. The currency might have carved a meaningful bottom around 104.20 levels and could be underway towards the 110.00 handle.
USDJPY has managed to push through 107.00 levels as expected and is seen to be pulling back for now. Immediate resistance is seen around 107.85 and 108.00 levels and a break higher would be constructive for bulls to carry further.
Looking into the wave counts, the rally from 101.18 lows through 111.75 highs have been marked by Wave (1) on the chart here. The subsequent drop seems to be corrective labelled as A-B-C, potential Wave (2) termination around 104.20 levels.
If the above is correct, USDJPY bulls should be targeting above 111.75 in the near future, while prices stay above 101.18 mark. We would then take a review on probable wave counts and the next major direction for the currency.
On the above proposed wave structure, also note that Wave (2) has managed to terminate just below fibonacci 0.618 retracement of Wave (1). Ideally, prices should be able to extend through 111.75 mark, going forward.
Intraday support should come in around 106.50 levels and the next short term target should be towards 108.00 and higher respectively. USDJPY remains a good candidate to be bought on dips.
Long against 103.20, targeting above 110.00