I kept expecting that USD/JPY will start rallying but those expectations were clearly in vain. The reason why I thought that would happen is that it is very strange for a corrective wave (marked in red on the W1 time frame) which should be B or X wave to develop as an impulse – and that was a perfect impulse formation. That is why I concluded there should be another wave to the north.
That didn’t happen. Obviously, considering the issues affecting the USD – North Korea, the hurricanes causing so much damage in the States – there is no way for the dollar to strengthen at this moment.
USD/JPY broke out below the trend channel (in blue on the D1 time frame) and if it reaches its limit the first target on the way down should be at 106.00. Should the depreciation deepen the pair could find a stronger support around 101.50-101.00.
I have already written about my expectations for a rally, but they are becoming less and less valid.