(MENAFN- DailyFX) After a series of smaller degree 1-2 Elliott Wave advances, the up trend has stalled at a resistance trend line. The wave picture previously painted is still technically bullish though the inability for USD/JPY accelerate higher is concerning.
One thing is obvious, downward moves in USD/JPY are carving in three waves while larger advances are impulsive. This implies that regardless of what the near term Elliott Wave pattern is, the longer term pattern is bullish and could be at the beginning edges of a larger advance.
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A correlation we have been keeping an eye on is USD/JPY versus . We can see a historical relationship occurring between the two markets. Of late, Nikkei has been cranking higher to levels not seen in 21 years while USD/JPY cannot break recent highs.
If this correlation moves back into favor, then it suggests one of these markets may play ‘catch up' to the other. That would imply USD/JPY reverses its recent range and cranks higher to ‘catch up' to Nikkei. Alternatively, Nikkei may reverse lower and underperform against USD/JPY.
IG Client Sentiment shows the number of traders have been shifting net short over the past couple of week. This is actually a bullish signal that lines up with the longer term Elliott Wave model. View how live traders are currently positioned with our
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---Written by , CEWA-M
Jeremy is a Certified Elliott Wave Analyst with a Master's designation. These articles are designed to illustrate Elliott Wave applied to the current market environment.
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