The USD/JPY needs to make a breakout above the resistance trend line (red) to confirm (green check) the uptrend continuation. A bullish breakout is aiming for the Fibonacci targets of wave 5 vs 1+3 and the next resistance line (red). A break below the support trend lines and 61.8% Fibonacci retracement level invalidates (red x) the wave 4 (blue) pattern.
The USD/JPY seems to be building a complex WXY (green) correction with the current retracement looking like an ABC correction (orange). The current bullish price action could face strong resistance (red) line and Fibs of wave B vs A and a bearish bounce could send the pair towards the bottom (green check) of the flag channel. A break above the 78.6% Fib makes an immediate breakout also possible. A bullish bounce at the 50% Fibonacci level of wave 4 (blue) confirms this wave 4 (blue) pattern whereas a bearish breakout below the 61.8% of wave 4 vs 3 invalidates (red x) it.
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This article was originally posted on FX Empire
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