A decline from 125.80 to 116.15 was made in three waves, so we think that pullback from the last few months was nothing else than just another correction within ongoing uptrend that is in play already since 2012. In fact, reversal up from 116, at the end of August, was sharp so it belongs to a minimum three wave rise, that is now in play. So actually move could be only temporary and corrective A-B-C recovery, but ideally we will see an impulsive rally up into wave five that will be targeting new highs by the end of the year. We may see extension up to 127 once the trendline resistance from 125.80 is taken out.

USDJPY, Daily

On the lower time frame, USDJPY is trading nicely higher this month with strong bullish momentum so leg from 120.20 must be impulsive, most-likely it's an extended blue wave (iii) that can move even up into 125.00 area. That said recent pullback looks like a completed wave iv) now which suggests continuation to new highs while 122.20 level is not breached.

USDJPY, 4H

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