USD/JPY: Harmonic Structure Visible on the Higher Timeframes

Daily ‘Alternate’ AB=CD Bearish Pattern

The USD/JPY recently touched gloves with a major long-term resistance at ¥143.89 and is on track to pencil in a bearish outside reversal candle on the daily timeframe. Adding to this, price action came within striking distance of connecting with a daily ‘alternate’ AB=CD bearish formation at ¥144.03 (denoted by a 1.272% Fibonacci projection) before rotating lower.

Absent any obvious support on the daily chart, technicians are likely to target the 38.2% and 61.8% Fibonacci retracement ratios derived from legs A-D at ¥141.33 and ¥139.74, respectively.

Daily Chart:

Weekly Alternate AB=CD Bearish Pattern Also in Play

Interestingly, on the weekly timeframe, we can see that price action has also been working with an ‘alternate’ AB=CD bearish formation at ¥143.53. But and this is key, we can also see that the currency pair has tested the ‘1^st support’ target at ¥138.29: the 38.2% Fibonacci retracement ratio derived from legs A-D. As a result, with the 1^st downside support achieved and buyers making a show, further upside may eventually materialise.

However, given that we are seeing weekly price test ¥143.53 again at a time the daily chart is shaking hands with an AB=CD bearish pattern, this could be enough to pull price action lower towards at least the 38.2% Fibonacci retracement ratio on the daily timeframe at ¥141.33.

Weekly Chart:

Charts: TradingView

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