EWM Interactive | Sep 30, 2014 07:05AM ET
USDJPY has been in a strong uptrend for the last two months. Is it time for the bulls to take a rest? Traders may want to see what the probabilities show.
Our job as analysts is to try to determine when the trend is most likely to reverse or make a pull-back. In order to do that, we use a method, called the Elliott Wave Principle . It is probably the most advanced price-pattern recognition technique. According to it, trends move in five-wave sequences, called impulses. Every impulse is followed by a correction in the opposite direction. So, in the case with USD JPY, we have to see, if there is a complete five-wave move. If there is one, we should prepare for a pull-back.
If this is the correct count, USDJPY should make a new high above 109.74, but the 110.00 area may serve as a strong resistance and a reversal zone. The first target to the downside is around 108.50.
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