Nikkei and USD/JPY in strong positive correlationin; GBP/JPY in cross for possible long

January 19, 2017 09:56 AM
Elliott Wave Analysis: Nikkei, USD/JPY & GBP/JPY

We can finally see weakness of Japanese yen and USD strength which has something to do with a turn-down on 10-year U.S. notes in the last 24 hours, while stocks are turning up, especially Nikkei and DAX. As you know Nikkei and the U.S. dollar/Japanese yen (USD/JPY) currecny pair are in strong positive correlation, so if Nikkei is turning up following a completion of an A-B-C set-back then we know that USD/JPY should also be now back in bullish phase. In fact, we see clear five waves up on USD/JPY from 112.55, so trend is turning back to bullish mode, possibly even with sharp price move ahead if we consider that in the previous decline market formed an ending diagonal down in Wave C of Y) of 4. As such, we would be interested to look for entries on this one, but as always, we need a pullback lower into Wave 2.

Nikkei, 1-hour

USD/JPY, 1-hour

The British pound/Japanese yen (GBP/JPY) currency pair is also a very interesting cross for a possible long, but again, we need a pullback. Keep in mind after every five waves, pullbacks should occur in three sub-waves.

GBP/JPY, 1-hour

 

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About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/