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Bearish momentum developing

01 November 2016, USD/JPY

Bearish momentum developing

Wave Analysis

Yesterday, the motive wave (a) retraced lower than expected and even tested the 61.8 Fib level. We expect the level $105.22 to have marked the end of the corrective wave (b) that the current downward rally is the unfolding of the impulsive wave (c) towards the support level $104.01. This downward rally is highly anticipated since the other negatively correlated pairs, GBP/USD and EUR/USD are pretty much bullish and will likely continue long. This means, as long as the two latter pairs remain bullish, we look for potential short positions in Usd/jpy. These pairs have a strong negative correlation of up to -74% and will have an exact opposite price action during this intraday.

Trade Recommendations:

Remain short with an ideal target at 104.01

Graham Osano
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