FX.co ★ USD/JPY Elliott Wave Count for January 26, 2012

Market Overview
Yesterday the USD/JPY pair with great confidence reached the level of 65 pips and formed the new high at level 78.27. Further the USD/JPY pair started the descending movement from this resistance level. The news concerning the negative financial situation in the USA influenced the exchange rate of the pair. As a result the yen has strengthened against US dollar. This major currency tested for a several times 50EMA support level before it has been broken down and then continued the bearish movement. At the moment the price is testing the 100EMA support level. In case the level 77.50 is passed through it will be possible to consider the 200EMA the next support level located near the point 77.20.

Support and Resistance

(S3)77.15 (S2)77.43 (S1)77.59 (PP)77.87 (R1)78.15 (R2)78.31 (R3)78.59

Important News
(JPY) CSPI y/y
(USD) Core Durable Goods Orders m/m
(USD) Unemployment Claims
(USD) Durable Goods Orders m/m
(USD) New Home Sales
(USD) CB Leading Index m/m
(USD) Natural Gas Storage

Elliott Wave Analysis for USD/JPY
Today the USD/JPY pair finished the wave 3 (A, B, C) correction within the bigger wave 4 at level 77.52 and started the movement to the final wave 5. According to our wave rules and concerning that the wave 5 is equal to the wave 1 we can probably define the target levels proceeding from the amount of the pips that were passed. As the wave passed 77 pips we can determine our target by adding 77 pips to end of the wave 4 at level 77.52. In this case we can see the prospective wave 5 at level 78.29. For stop loss level we can use the end of the wave 1 at level 77.31.

Trading Forecast
Taking into account Elliott Wave Rules we can expect that today the trend will go upwards. Thus, it is recommended to open long positions at level 77.70 with Stop Loss at level 77.31 and Take Profit at level 78.29.