The small correction I expected towards 1.3023 turned into a much bigger correction, but did this big correction alter my count? No! It has not altered my count only a break below the top of wave 1 at 1.2802 would do that. I must say it's not that common, that wave 4 corrects more than 50% of wave 3 but it happens from time to time and we should accept, that correction can be almost impossible to predict. That said we have 3 rules, that can't be broken and one of them is, that wave 4 must not overlap wave 1. If it does we are not in an impulsive wave.
That means wave 4 can correct a bit more down to 1.2856 where it would have corrected 61.8% of wave 3. I would find it very surprising if wave 4 became deeper than that.
A break above 1.2973 will indicate that wave 4 is over and wave 5 higher is developing.
I think that USD/JPY is at an very important point. Both cases I have presented above is valid at this point, but we all know, that one of them is wrong. I favor the bullish case slightly above the bearish case, but we need a break above 83.00 and more importantly 84.17 to confirm the bullish case, which would call for much higher levels longer term. With the first major target being near 94.00
That said play the bearish scenario can be done from a relatively low risk point of view, by selling USD close to 83 with a stop just above 84.17. If a bearish triangle is playing out we should see one final trust below 75.56, before a major bottom is found and a new major rally begins.
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