USDJPY might be preparing to push higher towards 110.00 mark. The currency has carved a meaningful bottom around 104.20 and is holding well above that. Another higher low also seems to be in place around 105.10 levels and bulls are poised to remain in control from here.
USDJPY wave structure has been corrective since 101.18 lows in March 2020. The rally towards 111.75 was in 3 waves, which was followed by a corrective drop towards 104.20. High probability remains for another 3 wave rally towards 110.00/111.00 levels, going forward.
Also note that USDJPY had dropped to fibonacci 0.618 retracement of the rally between 101.18 and 111.75 levels, around 104.20. An engulfing bullish candlestick pattern also unfolded thereafter, indicating a potential trend reversal.
The rally towards 107.10 might be the first wave towards 110.00 and higher. At the moment, USDJPY might have found support around 105.80 levels and could be preparing to resume higher. Immediate support is seen at 105.10, followed by 104.20; while resistance is seen towards 107.50 mark.
USDJPY is expected to rally through 107.50 levels from here to keep the bullish structure intact. The entire wave structure from 101.18 would be complete after printing above 111.75 mark. Ideally bulls would be looking towards 112.00/113.00 before giving up.
USDJPY remains a great candidate to be bought on dips until it stays above 104.20 levels. A drop lower would still keep the structure intact.
Long against 104.20, targeting above 111.75