USDJPY continues to drift sideways and has tested its lower range around 107.30 mark. A sharp rally towards 108.30/40 still cannot be ruled out before bears are back in control. A break above 107.80 would encourage further push towards 108.30 zone before finding resistance.
USDJPY medium term wave structure still remains bearish against 112.22 resistance. The earlier drop between 112.22 and 101.18 still remains primary boundary, which is being worked upon. Ideally, prices should stay below 112.22, to keep the bearish structure intact.
Over the short term though, USDJPY might be facing resistance at 109.85 levels. Only a break above 109.85 would confirm that USDJPY is heading north towards 111.75 and 112.22 respectively. Bears are expected to remain in control for now.
The larger degree wave counts are indicting that USDJPY might have carved Waves (1) and (2) around 101.18 and 111.75 respectively. If these counts hold well, the currency pair should stay below 111.75 and continue lower as Wave (3) unfolds.
Going further from 111.75 highs, USDJPY might have carved lower degree Waves 1 and 2 around 106.00 and 109.85 respectively. Please also note that Wave 2, had reached the fibonacci 0.618 retracement of Wave 1 up to 109.85, before reversing lower again.
USDJPY is retracing the drop between 109.85 and 106.00 at the moment. The fibonacci 0.618 retracement of the above drop is seen around 108.30/40. A bearish bounce is expected if prices manage to reach there.
Sell again around 108.30/40, stop at 109.90, target below 106.00
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