USD/JPY 1H Chart 7:00AM EST 11/7/2012
Correction: We noted earlier in the week that the USD/JPY was getting into a bit of consolidation after finding resistance at 80.66. So far we have seen some strong developments, such as a 61.8% retracement of the latest bull swing from 79.27 to 80.66. We also lost bullish momentum in the very short-term as the 1H RSI dipped kissed 30. In fact the RSI shows some bearish momentum building.
Corrective count: When we look at the structure of the correction, we see a possible completion of an A wave (impulse structure), and a B wave (corrective structure). If the US Dollar-Japanese Yen is indeed in a corrective mode, then we are likely developing wave C. Sure the swing down to 61.8% retracement at 79.80 could have been the C wave, but there are many other possibilities including a triangle (the 1H RSI should hold above 40 in this case), or a more complex impulse wave down.
Impulse count: When we look at the chart starting from the September low of 77.12, we see that the market could be in a bullish impulse wave development. So far, we have (1)(2)(3) with a nice wave 5-wave structure within wave (3). If we are indeed developing a wave (4), then it should not fall below wave (1), which is at 79.25. The 31.8% retracement of the Sept-Oct swing is at 79.31. For bullish momentum to hold for another upswing, the 4H RSI should stay above 40, as it has during the development of wave (3).
USD/JPY 4H Chart 7:10AM EST 11/7/2012
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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