the USD/JPY is moving lower in a small downtrend channel. But the overall picture remains choppy and corrective.
This article will explain why the bulls have a decent chance of regaining control. Let’s review the key targets levels and invalidation zones before the U.S. Presidential elections.
The USD/JPY is testing a key support zone (blue box), which could provide a major bounce. There is also the support trend line (green) of the falling wedge chart pattern plus the Fibonacci levels.
A bullish breakout (green arrow) above the resistance trend line (red) of the wedge pattern could be the first signal of a reversal. This could indicate the end of the wave B (pink) and the start of the wave C (pink).
A break above the channel top (green check mark) could send price action towards the 50%, 61.8%, and 78.6% Fibonacci retracement level. A strong bearish bounce would confirm the wave D (purple).
On the 4 hour chart, there is a sign of 5 bullish waves (blue). This could indicate a first wave up (purple). It was also followed by a bearish ABC (blue) pattern, which did not break below the bottom of wave 1 (100% Fib).
A break below that bottom invalidates (red x) this wave outlook. A break (green checks) above the resistance (red) levels confirm the upside and the potential wave 3s. Of course, both a consolidation zone and volatility are possible before, during, and after the U.S. Presidential elections.