Bottom line:  USDJPY bearish structure remains intact until prices stay below 109.72 highs, print on December 02, 2019.

Technical Analysis:

USDJPY bears are back in control after a spike high was print at 109.72 early this week followed by a sharp reversal towards 108.40/50 levels yesterday. The much awaited Wave (2) termination seems to be in place now at 109.72 and bears are expected to print a series of lower lows and lower highs, towards 104.50, going forward. Looking at the overall wave count since 112.42 highs, the USDJPY had unfolded into 5 waves towards 104.50 levels, labelled as Wave (1). The subsequent rally unfolded into 3 waves A-B-C, and terminated as Wave (2) at 109.72 levels. If the above wave structure holds true, we should witness yet another 5 waves drop to complete 5-3-5 structure at least. At the same time, prices are expected to stay below 109.72, which is potential Wave (2) termination here. A break below 108.21, would confirm the above and USDJPY would be a classic sell on rallies instrument. Also note that prices have broken the counter trend line support and are trading into the sell zone. We might see intraday pullback or retracement from current price (108.77), but it should remain well capped below 109.72 levels. A high probable trade direction from here should be seen on the south side, against 109.72, with a potential price target below 104.50 levels. To avoid getting out of trade due to noise, it would be best to place stops above 110.68, which is fibonacci 0.786 resistance of Wave (1) discussed above. An intraday pullback towards 109.30/50 levels would be considered ideal to initiate further short positions or re-enter, as an opportunity to ride Wave (3) drop, which should be sharp and steep, going forward.

Prepared by

Harsh Japee, Technical Analyst

USDJPY Chart

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