USDJPY seems to have carved a meaningful bottom around 104.20 mark, over the last week. The currency had managed to rally through 106.50 levels before retracing lower again. Bulls are looking determined to pick up from here again.
USDJPY alternate wave structure is presenting a bullish scenario. The rally from 101.18 through 111.75 has been marked as Wave (1) of a larger degree. This being an impulse rally, a corrective drop was expected towards the 105.00/20 levels.
Looking into the structure since 111.75 highs, USDJPY seems to have produced a corrective wave labelled as A-B-C. Wave C probably terminated around 104.20, before USDJPY bounced back sharply towards 106.50 mark. It is also larger degree Wave (2) of the structure.
If the above proposed structure is correct, USDJPY is ready to push higher towards 108.00 and 110.50 in the next few weeks, as Wave (3) progresses further. Ideally Wave (3) should terminate above 111.75 mark.
Also note that USDJPY had dropped just below the fibonacci 0.618 retracement of Wave (1) which is seen around 105.20. This is also in accordance to the guidelines of the wave principle. Furthermore, an Engulfing Bullish pattern has been carved, indicating a potential bullish reversal ahead.
Lower degree Waves 1 and 2 also seem to be in place around 106.50 and 105.30 levels respectively. If the above holds, USDJPY should stay above 104.20 and push through higher levels in the next several weeks. Looking higher from here on.
Long against 104.20, targeting 110.50