Was This Week's Move in USD/JPY Just a Correction?

This week’s bounce in USD/JPY may have caught some traders off guard—but when viewed through the lens of the Elliott Wave Principle, the price action appears to be corrective rather than impulsive.

🧩 The Evidence: A 3-Wave Move
According to the wave structure:

The recent move up unfolded in 3 waves, labeled as an ABC correction.

Wave C terminated near the 100% Fibonacci extension of Wave A (~146.189), which is a classic ZigZag ratio.

Additionally, there was a clear MACD divergence between price and momentum as Wave C completed—a common sign that the move is running out of steam and that the wave is likely terminal.

These clues all point to the idea that the rally was corrective, not the start of a new impulsive trend.

📉 What Comes Next?
If this count is correct:

USD/JPY may have completed Wave (ii) of a new downward impulse.

The next move could be the start of Wave (iii)—typically the most aggressive and directional wave in a 5-wave decline.

✅ Trigger Level: A break below the B wave low would act as a technical confirmation of the downtrend resuming.
This would be a green light to look for short setups, depending on the strategy each trader follows—whether that’s pattern-based, indicator-confirmed, or structure-driven.

🔁 Alternate Scenario:
If this isn't the start of Wave (iii), the alternate count would suggest a more complex corrective combination (such as a double three).

However, even in that scenario, the short-term direction is still likely downward.

🧠 For Beginners:
Elliott Wave theory breaks price into 5-wave trends and 3-wave corrections.

A ZigZag correction (ABC) is made up of a sharp Wave A, a pullback in Wave B, and a final move up in Wave C.

Wave C often shows momentum divergence (MACD diverging from price), signaling that the move may be exhausting.

When C = A, especially with divergence, it’s often a sign the correction is ending.

📌 Summary:
USD/JPY’s rally appears to be a corrective ABC structure.

Wave C rejected at the 100% extension of A, with MACD divergence confirming weakening momentum.

A break of the B wave low could confirm that Wave (iii) down is underway.

Even in the alternate count, near-term downside is still favored.

💬 Got a Favorite Chart You’d Like Analyzed?
If there’s a forex pair, crypto, or stock you’d like me to break down using Elliott Waves,
leave a comment below and I’ll feature it in an upcoming post from Real Wave Trader.