the USD/JPY made a bearish retracement after completing a wave 3 or C (pink). But the price is showing a bullish reversal, which could indicate a new uptrend.
This article reviews the key Fibonacci levels, moving averages, and price patterns.
The bearish pullback respected the Fibonacci levels and long-term moving averages. This indicates a wave 4 (pink) – even though the retracement was deeper than usual.
The bullish reversal at support and the break above the 21 ema zone could indicate the start of the wave 5 (pink) of the larger wave C (purple).
A bullish ABC zigzag should take the price higher. The main bullish targets are located at 106.20 and 106.75.
Only a break below the long-term MAs places the uptrend on hold (yellow button). A break below the 88.6% Fib invalidates the uptrend (red button).
On the 1 hour chart, price action is building a higher high and higher low. The bullish trend channel could indicate a 123 (grey) pattern.
But a bullish breakout and shallow pullback is needed to confirm the upside (green arrows). This indicates a potential wave 3 (grey), which needs to hit at least the 161.8% Fib to confirm this wave pattern.
The support zone (green box) is a key decision zone. Price action could break below it and still be bullish as part of another wave 1-2 pattern. But a deeper retracement makes the uptrend unlikely (red circle).