USDJPY Outlook – The Bulls Need a Rest – 05 Nov 2013
USDJPY outlook is still bullish and the uptrend is still intact. But, after having run up strongly in this wave, the bulls are tired and need a rest.
Here’s the updated daily USDJPY price chart.
The Elliott wave count shows that the wave  was an extended wave and it is about 2.62 times wave . This is larger than the typical extension and shows that the USDJPY currency pair is very bullish indeed. The MACD too supports this as the momentum has been rising with price.
So a correction is in order as the bulls need to take a breather. In fact, we said that the wave  might have ended at 101.0 itself in last week’s update as that is 1.62 times wave 1 which is a typical extension. But, it went further upwards.
Notice that the price appreciation got stopped at the region where the USDJPY had turned down strongly before. This is highlighted in the red circle. It is obvious that this level is providing some strong resistance.
The support zones are highlighted in green circle.
It is very likely that wave  is in progress. Since wave  was a sharp retracement in the form of a zig-zag, wave  is likely to be a shallow retracement in the form of either a flat or a triangle. This gives us a target zone of between 101.2 and 101.9.
The green support zones (in green circles) sit right in the target zone as well. So this gives further weight to the target zone.
Both a flat as well as a triangle will have big price swings but overall the movement will be sideways. Some volatility can be expected for the next few weeks.
USDJPY outlook is looking for sideways price action with price swings for the next week or so. Thereafter, it is expected to head higher to complete wave 5.