The miserable trading conditions in USDJPY are probably explained by its
long term Elliott wave position. That is, the rate has been mired in a
corrective 4th wave all year. The good news is that wave 4 probably ends
soon. Keep focused on the Elliott channel. The line crosses from about
100 to 100.75 for the remainder of August.
The USD/JPY pair initially fell during the course of the day on Friday,
but as you can see the market did find enough buying pressure nearly
101.50 level to turn things back around and form a hammer. We are still
right dead in the middle of the larger consolidation area between the
101 and 103 levels, so we are not looking for any reason to get involved
at the moment. Nonetheless, we do believe that the market will
ultimately go higher, and probably break out to the upside. Perhaps
short-term long positions could be played, but that’s about it at this
point.
