In my last posting on USDJPY a few days ago, I had counted that 105.55 could be the end of the major correction from 125.70. If true, then 105.55 would be a major bottom from which a big, long term rally would begin.
The price action and chart pattern after 105.55 have been supportive of my wave count. This is especially so last Friday, when USDJPY only dip to 106.40 after a weaker than expected US nonfarm payrolls number, and promptly closed at 107.10. Now it has even broken above the short term resistance/neckline of 107.50. So from 105.55, wave count waves<1><2><3><4><5> up. Wave<3> consists of waves-I-ii-iii-iv-v. If my count is correct, USDJPY is on wave-iii of wave<3> now, targeting 110.80-111.00 within these few days. A break below 106.40 negates my bullish call and I'll have to re-count.
Interesting, there was an article yesterday which talked about the "Soros Chart" on JPY, which Soros used to predict the huge rally in USDJPY in the 1990s. An expanding monetary base in Japan is enough to vastly weaken the JPY.
This is a short term update to the views above. After my posting, USDJPY rallied to a high of 109.38 and then retraced down to 108.23 so far today. This is the 38.2% retracement of the 106.45-109.38 rally. The pattern of this dip from 109.38 is corrective and there is a FALLING WEDGE pattern from 108.83-108.23 (evident in 5min and 15min charts). As such, I believe USDJPY has finished its short term correction and is now poised for the next rally to 110.00 within the next 2 days.