Japanese Yen ETF: Elliott Wave Forecasting Breakdown?

T. Pizzuti and K. Hulse

Our June 2019 chart for the CurrencyShares Japanese Yen Trust NYSEARCA: FXY showed the fund testing resistance at 89.24.

We also said it could test the next higher resistance at 90.41 before declining – per our Elliott wave analysis. That’s exactly what happened.

This week we show what to watch for as confirmation that the expected larger Elliott wave downward trend really has resumed.

There should be some trade entry opportunities soon.

Recall that the Japanese Yen has been working through a contracting range since August 2016. We count that contraction as an Elliott wave triangle, and it occupies the place of wave [iv] in what will probably turn out to be a large five-wave decline from the 2011 high.

As of now, the structure of the final wave (e) of the triangle appears complete, and the strong rejection from resistance at 90.41 lends credence to the idea that downward wave [v] has begun.

japanese yen decline lower elliott wave pattern forecast fxy year 2020 low bottom

The supports that need to break for confirmation of this scenario are 86.71 and possibly 85.70, but only after an upward retrace that counts as wave (ii). Likely candidates for resistance that could cap wave (ii) sit at 88.11 and 89.07. As is typical with this kind of analysis, the break of support confirming the scenario would happen some time after the “ideal” trade entry moment.

Note that the Lomb periodogram is signaling that now is a likely time for an upward reversal of some type. That is consistent with the expectation of a wave (ii) bounce.

The next lower support and resonance levels at 85.61, 82.68, and 80.52 are merely preliminary based on a Fibonacci-related technique. We will be able to identify more fine-tuned targets when it is apparent that upward wave (ii) has finished playing out.

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The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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