- USD/JPY has reversed the trend and is now rising in the short term.
- Although an ABC correction was made, there was no subsequent decline but instead an increase.
USD/JPY has likely reversed its short-term downtrend and is now trending higher after establishing a new sequence of higher highs and higher lows. Given the saying “the trend is your friend,” this suggests that a bullish bias is in place in the short term.
USD/JPY 4-hour chart
The trend change came about after the pair continued to rise despite an ABC correction between August 5 and 7. Normally, the completion of the ABC correction would have been a signal that the pullback was over and the dominant downtrend would resume. However, in the case of USD/JPY, it did not decline and instead traded sideways before making a decisive uptrend on August 15.
The break above the top of wave c suggests that the short-term trend is now likely bullish and therefore likely to continue higher. The 100-period simple moving average (blue) is currently capping gains, but a close above it would likely confirm a continuation of the uptrend to a target of 150.90 (August 1 swing high), followed by 151.94 (July 25 swing low) and then perhaps 155.22 (July 30 swing high).
