USDJPY has finally reversed early this week after printing lows around 103.15 levels. The currency has managed to produce a meaningful Morning Star bullish reversal signal and has also taken out immediate resistance at 105.34 mark. Potential opportunity to buy on dips from here.
USDJPY medium term outlook remains bullish since March 2020 lows around 101.18 levels. The rally between 101.18 and 111.75 has been retraced through fibonacci 0.786 levels around 103.40 zone and bulls have managed to reverse.
The recent boundary which is being worked upon is between 103.15 and 105.70 respectively. A lower degree Wave 1 could be marked around 105.70 highs yesterday. USDJPY is pulling back and is expected to find support around 104.20/30 zone.
Also note that fibonacci 0.618 retracement of the recent rally between 103.15 and 105.70 is seen to be passing through 104.20/30 zone. High probable bullish reversal is possible if prices manage to reach there. The current pullback could be marked as potential Wave 2 lower.
USDJPY is then expected to resume its rally higher towards 106.00 and 107.00/50 levels at least, as Wave 3 progresses. Looking at the entire wave structure between 101.18 through 103.15 lows, it seems likely that bulls would be poised to push through 111.75.
USDJPY remains a good candidate to be bought on dips towards 104.20/30 zone from here. The currency would be providing an opportunity to initiate longs around termination of corrective Wave 2 and then resume higher as Wave 3, going forward.
Long against 103.00, targeting 111.75