USD/JPY: Sell the rallies circa 108.06/15? – Goldman Sachs

Analysts at Goldman Sachs offer a technical outlook for trading the USD/JPY pair in the coming months, having applied the Elliot wave analysis.

Key Highlights:

“USDJPY is approaching strong resistance ~108.

The level to watch closely here is 108.06-108.15

As has been discussed at length in recent updates, this 108.07-108.15 area includes an ABC off the March low, 38.2% retrace and the bottom of a previous range from Apr. '17. It's an important place in that it will help to determine whether the recent recovery is counter-trend or impulsive.

If viewed as a 4th of 5-waves down from the November high, the next sell-off has potential to make new lows (back towards ~104). Having said that, it will be difficult to justify that this is the 4th wave above 108.07-108.15. In other words, anything further than there significantly increases the likelihood of having actually put in a base.

View: Tactically higher, next in focus 108.06-108.15. Watch for a top once reached. Re-assess the downside bias through 108.25/108.50.”