Wave marking analysis:
As expected, during the yesterday’s trading session the USD/JPY pair was declining and in the second half of the day it managed to hit the target placed at 76.65. Meanwhile the dynamics of this downside motion provides grounds for assuming its possible transformation into a full scale five-wave structure. At the same time it should be stated that as the control level which corresponds to the November low of 76.55 has not been broken, the declining section that had been formed after December 23 can still be considered a correction inside the waves аbс with a considerable prolongation in the wave c. Nevertheless, the MACD being on the positive side suggests beginning of a dynamic retrace of the pair in favour of the dollar.

Targets for c-wave option:
76.55 – minimum of November 2011

Targets for upside movement renewal option:
77.19 – 61.8% Fibo
77.40 – 50.0% Fibo

Ideas and trading recommendations:
The current movement can be seen as a correction versus the motion of November 18. The target of a decline within the framework of a series of waves a-b-c is the level 76.55, and price movement below this level will need reconsideration of a wave marking. A rather non-logical strong downfall points at bearish market. Though from the viewpoint of wave analysis it is very problematic to forecast the long-term prospects as well as mark the waves in midterm prospect. Often non-standard correctional structures do not add optimism to the pair trade.
Oversold stochastic suggests a possible rebound of the pair to the upside within the nearest future in the direction of 76.94 and 77.19.