Price action for the USDJPY from 111.305 to 108.49 is identified in this analysis as a 3wave move that terminated a minute wave ((a)). The implication of the above is that an Elliott wave flat structure is anticipated.
The horizontal red lines above indicated the possible termination point for minute wave ((b)) before a sell off ensues that should see the USDJPY retrace at least 100% of minute wave ((a)). This is indicated by the horizontal purple line on the chart.
A bearish divergence on the relative strength index also further supports the potential for the USDJPY to move to the downside as it indicates the loss of bullish momentum.
The only alternative scenario for this analysis to remain valid is an expanded flat structure. This permits minute wave ((b)) to retrace ~138.2% of minute wave ((a)) so that any price close above ~$112.38 invalidates the bearish scenario for the USDJPY.
Possible points of entry into the trade includes selling the USDJPY as soon as price targets the horizontal red lines. This approach is more aggressive than using an alternative point of entry (i.e. POE2) which is more conservative and is initiated when price breaks below ~109.95.
For more information on my work, price targets and analysis, join here.