Elliott Wave update on USD/JPY

The Elliott Wave analysis of USD/JPY presented to you on 12th April spoke about a deep downmove once the 4th wave was finsihed. I was looking for the fourth wave to be completed around 86.90, but the markets have come down from 85.50 levels. I have received some research from a leading investment bank saying they have gone long USD/YEN from 82.06 with a 3-month target of 86. Their stops are at 80.50 ( a risk-reward ratio of 1: 2.6). I am giving you that information just so that you are sware of the divergent views in the market. My own preference is for the USD/JPY to edge lower towards 80.90 as a first target. We shall see what happens there again.


  • K P Ganesh

    In that case the Wave (3) that you have marked needs to come down to Wave (5) doesn’t it Sir. That way on reaching the target of 80.80, USD/YEN would have completed a 5 wave decline, meaning USD/YEN is in a bear market of higher degree. If we go by your present marking Wave 5 instead of Wave 3 becomes the longest wave, contradicting Elliott Wave guidelines.

    • Ganesh, All wave counts are tentative, and will be subject to adjustments as we move along. Wave analysis aims to guide us traders on the direction and possible amplitude of upcoming moves. I could, and might move wave (3) down to where I have positioned wave (5) currently later on. Finally, the Wave Principle guideline is that wave 3 cannot be the shortest of the three impulse waves. It can be equal to wave 1….

      • Nagarajan

        I believe, Ganesh is spot on.

        Flat Wave 4 is in progress. And considering it’s a zigzag correction in Wave 2 and didn’t take long to start wave 3, I expect wave 4 to square wave 3 in time and Wave 5 to equal Wave 1 both in price and time, which could go down near to 80.

  • K P Ganesh

    Thanks for that clarification, Sir. My question was aimed at finding a safe stop loss target, using wave principle guidelines, so that once a confirmed wave pattern is observed, a trader can enjoy the ride till prices come close to or near to his target point, using trailing stop loss. So it becomes imperative to not just identify a wave pattern to take a trading call, but also know where he/she need to have stop losses and be efficient in money management.

  • Pankaj

    We have reached target of 80.90. Is it time to go long the dollar against yen now?

    • Pankaj, you should read my comments of 13th April. The 80.90 was only a ‘first target’. Finance managers who have a long-term liability management strategy might consider funding in Yen starting here, which means drawing on Yen denomionated loans in stages and converting into USD, for example. That is different from a USD/YEN trader going long!!

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