Expected wave counting of USDJPY weekly chart is shown in
Annual Wave Analysis, 2006. Until the last moment the first upward part of final wave
[E] of the global triangle was labeled as a double zigzag.
From December, 2005 some correction is forming on this chart, judging by its structure it may be a
horizontal triangle. This very triangle forming makes me revise the counting of the last upward part of JPY movement (refer to Figure 1 below).
Figure 1. Wave counting on the daily chart.
The variant shown in Figure 1 is not ideal, though it does not break the rules of Wave Analysis. Moreover it corresponds to the principle of Occam's Razor .
This variant is confirmed by the following arguments:
- Impulse structure is developing within the clear trading channel.
- Impulse corrections are in keeping with the guidelines for both depth and shape alternations of patterns (67% - ~38%, deep triple zigzag – horizontal triangle).
- Duration of the fourth impulse wave is longer than that one of the second wave.
- In the third wave of impulse 3 extension formed in its fifth sub-wave ([v] of 3), it is characteristic of the third waves.
- Wave 3 is ~ 2.618 times longer than wave 1 (Fibo).
- Wave 4 is assuming the shape of the horizontal triangle, which is characteristic of the fourth impulse waves.
- Zigzag is the most widely spread pattern for waves of a triangle. It is quite reasonable to assume that this impulse is first “leg” (A) of zigzag [E].
“Excessive” extension of fourth waves
[iv] of 1 and
[iv] of 3 in relation to their secondary waves and intricate structure of wave
[iii] of 1 disquiet.
Possible variant of wave counting of the initial part (including that one of wave
[iii] of 1) is shown in Figure 2 below.
Figure 2. Wave counting on 480M chart of the initial part.
In case the supposition is correct once wave
4 is completed in the shape of the horizontal triangle price upward thrust should be expected. The scope of this move will correspond to the widest part of this triangle. Strong resistance
122 and
126, suitable for
project targets (refer to Figure 1 above and Figure 3 below), is at this level and at the distance of 0.618 from it.
Figure 3. Wave counting on 480M chart of the final part.
Currently forming contracting horizontal triangle is of quite a regular shape (refer to Figure 3). Correlation of one-direction waves corresponds to the
regular Fibo coefficient 0.5. Thus we may assume that final triangle wave may coincide with this proportion.
In case the supposition is correct this triangle may complete around
116.60.
Moreover this impulse may help to project JPY movement in 2006 and 2007 as taking into consideration the above information wave
[E] of the global triangle will most probably assume the shape of the
zigzag,
most widely spread pattern for waves of triangles (refer to Figure 4).
Figure 4. Wave counting on the weekly chart.
In case the supposition is correct corrective wave
(B) of zigzag
[E] may last up to the next pulse point at the junction of 2006-2007. Strong resistance levels at
112 and
108.50 in this case approximately correspond to Fibo 50% and 62% of wave
(A).
Then final upward impulse (or diagonal triangle)
(C) is expected to start forming.
Reference
Dmitry Voznuy
forDmitry@yahoo.com
March 9, 2006
The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
