USDJPY Elliott Wave Analysis: 4-Month Triangle Could Be Near Completion

By: Gregor Horvat | Tue, Oct 15, 2013
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USDJPY is trapped in tight range for around four months now which could be at the end if we consider an Elliott Wave triangle pattern that is pointing higher. The reason is a move in five legs, labeled as A-B-C-D-E, which suggests that pattern is near completion. In fact, we have seen a sharp reversal last week from 61.8% Fibonacci support compared to wave C) distance which is usually a stopping point for E) waves. As such, we suspect that prices will rally in days ahead, this time towards and ideally through 100.50 mark that will put bullish price action in play for a new high of the year on USDJPY.

USDJPY Daily

USD/JPY Daily Chart


Educational Part: Elliott Wave Triangle Pattern

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

Contracting triangle

Idealized Elliott Wave Contracting Triangle Chart

• Structure is 3-3-3-3-3
• Each subwave of a triangle is ussaly a zig-zag
• Wave E must end in the price territory of wave A
• One subwave of a triangle usually has a much more complex structure than others subwaves
• Appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes

 


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Gregor Horvat

Author: Gregor Horvat

Gregor Horvat
www.ew-forecast.com

Gregor Horvat

Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of www.ew-forecast.com, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on: SafeHaven.com, FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At www.ew-forecast.com he helps clients and educate them about the Elliott wave prinicple and how to label and track unfolding patterns in real time.  His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators.

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