USDJPY Facing A Temporary Correction; While USD Index Trading In Final Stages Of A Downtrend
USDJPY is in a nice recovery since mid-June when market turned up from 108.80 after a completion of a bigger three wave fall. That said as we can see bulls took charge and can now be unfolding a bigger impulsive structure. We see first waves one and two completed, which means recovery up from 110.95 level can be blue wave three, now finished after recent turn down from around 114.50. As such, be aware of a three wave set-back into wave four that can stop around 112.87 level.
USD index is still trading bearish, specifically in final stages of black wave 5 of 5). We can see recent rally as a corrective wave 4, that found its resistance at the 96.21 level, from where a new drop lower occurred. That said, ideally current black wave 5 will now search for support and a low near the lower channel line, where a new bounce higher can follow. A five wave recovery from the lows and a breach above the 96.21 level would indicate a change in trend.
USD Index, 4H
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