Hello traders! Today we will talk about weekly USDJPY chart and we will show you many evidences for a potential bottom formation.
Well, for the begining let’s talk about wave structures from Elliott Wave perspective. USDJPY is in a downtrend since March. But the wave structure is slow, choppy and overlapped which we see it as a complex corrective W-X-Y decline and we know that once corrections fully unfolds, we can expect a reversal.
The next very important evidence is an ending diagonal ( wedge ) pattern placed in third leg Y. The ending diagonal is a special type of wave that occurs in wave 5 of an impulse, or wave C/Y of a correction. The reason why they are so interesting is because they are indicating a reversal, usually a strong one.
The next interesting evidence is that we are already seeing bounce and recovery with quite big weekly candlestick. Completely covered the previous one, called bullish engulfing candlestick formation which also suggests a bullish reversal from the lows.
If we also consider current break above strong weekly trendline, then with so many evidences, we can easily confirm a potential bottom and bullish reversal.