FXstreet.com (Barcelona) - The USD/JPY rose to a five month high at 100.45 on April the 6th, to drop back again to levels above 98.00, and according to Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, the pair, while expected to remain moving broadly sideways, could attempt to set another interim high next month.
Elliott, convinced that the USD/JPY will remain sideways for the most part of the current year, affirms that the current decline is part of a corrective reaction: Because we predict a series of broadly sideways moves for the bulk of this year, with many interim highs and lows along the way, predicting where these lie will be a difficult problem which we will have to face again and again. This is the case with April's high at 101.45, just as it was with March's one at 99.69. At the moment we see the pull-back from the recent high as corrective, retracing just 38% of the previous rally, and an A, B, C-type move which should base imminently.
For next month, Elliott points out to the possibility of reaching a new interim high next month: This should then set up for another cautious upside probe next month. However, if the market was to break and then trade consistently below the 97.00 area we will probably be tempted to say an interim high is already in place.
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