USDJPY

The above count is my preferred count for several reasons, due to some key relationships of the second zigzag & the outlook of the US dollar index since the 1985 peak and this pair's cousin the USDCHF which will be posted next. Let us examine the structure on the USDJPY since 1985. Points to note is that the thrust terminated right around the time of the triangle apex which strengthens the likelihood of an important turn. Next the diagonal wave C( which signals that this move is the final zigzag as a diagonal wave C is only allowed as the final C wave of a multiple zigzag correction) is 38.2% of the wave A in time and in price as well in semi logarathmic terms. This pattern would qualify as a truncated zigzag (wave C shorter than 0.618x wave A but longer than 0.382x wave A [not the traditional meaning of a truncated C wave]) under Glenn Neely's quantification. He notes that such patterns have a minimum retracement target of 81% and are almost always part of a larger degree triangle, does that mean that the USDX is forming a triangle from its 1985 peak? ( 1970 trough in terms of the USDJPY pair) Personally I would wait for the market to prove that assumption. As for now let us have the 125 handle as a minimum target as our next count would suggest.

This count supports the idea of a diagonal fifth wave, bear in mind that diagonals signal the end of the move of one larger degree, but usually signals the end of a move several degree's higher which is why I personally favor the first count presented. Anyhow here is the diagonal in greater detail with internal wave relationships.

Now looking at the price action since the low it seems evident that we have terminated 3 minor waves to the upside currently in the wave 4 corrective pull back (still not complete)

Bear in mind that the decline from the proposed wave 3 peak is an impulse, as of now we have reason to believe that the wave 4 will unfold into a zigzag unless this wave a is 2 degrees lower of the entire correction and this decides to unfold into a flat/triangle as of now the structure from the wave 3 high is 5-3-3, which means we have 2 possibilities unfolding either a wave a down b up and a diagonal wave c in process with 4 wave yet to complete, or we are in a wave a and we are forming a triangle/flat b wave. Points to note: According to Robert Balan author of Elliot Wave Forex, Alternation in the Forex market is usually in depth rather than pattern he states that when wave 2 retraces 61.8% or more of wave 1 (which is the case in the above picture) expect wave 4 to retrace 38.2% of wave 3 which gives us a target of 81 the figure which is the wave 4 price zone of one lesser degree, I would also watch the 50% retracement however in this case seems less likely.


EDIT: 4 hr chart Alternate 1-2-i-ii (in process) less likely the wave 3 is already 2x wave 1 if this is a 3rd wave extention of minor degree how much further will this 3rd wave rally, unless ofcourse it sported a 1st wave extention which is rare specially in third waves due to the guideline that states the extention is usually the same wave (3 in this case) as the parent wave.

Regards,
Ahmed Farghaly