USDJPY might drop through 108.50 levels before resuming rally

USDJPY had rallied swiftly from 109.00 lows through 110.60 highs recently. The rally also looks to be an impulse and might be complete around 110.60 mark. The recent structure at least calls for a corrective drop towards 109.50, before resuming higher again.

Looking at the larger degree wave structure, USDJPY has been producing a standard corrective flat since 101.18 lows registered in March 2020. Waves (A) and (B) already seem to be in place around 111.75 and 102.59 levels respectively.

If the above structure unfolds accordingly, USDJPY has been progressing within larger degree Wave (C) since 102.59. Please also note that it is producing an impulse to terminate Wave (C) above 111.75 levels.

Within the impulse wave, USDJPY bulls have managed to carve Waves (1), (2), and (3) around 104.40, 103.30 and 111.70/75 levels respectively. Furthermore, Wave (3) was an extension and 3 of (3) was also extended (not seen on the displayed chart).

A larger degree Wave (4) has been unfolding since then and it might have terminated around 109.00 levels recently. If correct, USDJPY bulls would be able to hold prices above 109.00 and continue higher towards 112.50 levels at least. Alternately, a drop below 109.50, would open doors for another low towards 108.50 before terminating Wave (4).

Prepared by

The Profinacademy.com Team