USDJPY had managed to rally past 108.00 handle before pulling back yesterday. We cannot rule out another push through 108.30 levels, before giving in to bears again. The Japanese Yen is expected to remain strong until 109.85 resistance is intact, going forward.
USDJPY had dropped in an impulse wave earlier, between 112.22 and 101.20 levels. A larger degree Wave (1) might be in place and the structure remains valid until 112.22 resistance holds. Going further, the rally towards 111.75 has been corrective A-B-C, Wave (2) on the chart here.
Since 111.75 levels, a larger degree Wave (3) is unfolding and it should terminate below 101.20, going further. Looking into the sub waves within Wave (3) USDJPY might have carved Waves 1 and 2 at 106.00 and 109.85 respectively. Immediate resistance remains at 109.85 and the single currency should stay below that handle to keep the bearish structure intact.
The recent drop between 109.85 through 106.00 is being retraced as we prepare this article. The corrective rally is expected to terminate around 108.30 levels, which is fibonacci 0.618 retracement of the above drop. A bearish reaction remains high probability if prices manage to reach there.
USDJPY remains a good candidate to be sold on rallies towards 108.30 levels. Bottom line: The 109.85 handle should remain intact, going forward.
Look to sell more around 108.30, stop at 109.85, target remains open.
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