18 May 2016, USD/JPY
USD/JPY is currently trading with a bearish bias. Yesterday, the pair broke above the resistance level 109.34 but ended up closing below it. As long as the pair trades below the supportive trend line and below the resistance level 109.34, we expect an acceleration to the lower side but should not go below 108.47. Ideally, the anticipated downward rally, should be the unfolding of wave (c) but should not close below 108.47. This view can only be invalidated if the pair ends up breaking above 109.62. If the latter is the case, then we expect an acceleration to the upper side but should not go above 109.95. This pair should be traded alongside USD/CHF, GBP/JPY, and USD/CAD. These pairs have a strong positive correlation of up to +0.95 and will have a similar price action during this intraday.
As long as the pair trades below 109.34, look for short positions with an ultimate target at 108.47. Buy Positions are only recommended above 109.62 with a target at 109.95.