It is fascinating how accurately the RSI momentum readings confirmed the Elliott context and signaled the return of the larger degree bull trend on the USDJPY chart. It armed us with enough confidence to change our previous assessment. Let’s see how.
Notice on the weekly USDJPY (below) that the two corrections’ starting points were above 67 on the RSI. And, when the Japanese yen pulled back, the 50 area on the RSI provided support throughout both triangles. Usually the 38-50 area is where the bears run out of fuel during larger degree complex corrections.
But, the weekly was only the background confirming the existence of the larger degree bullish volcano. One timeframe down the daily showed a clear ranging market. The RSI failed to ever get below 34, or above 67, until the July 30 push. At that point RSI had no trouble piercing above the 60+ level. 60-66 would have been expected to provide resistance if the correction was going to develop further. The RSI confirmed the end of the 7 month long narrowing range pattern by breaking the range boundaries and qualifying the following 5-day long setback as a breakout pullback long setup.
Final note: we marked the three overall sideways moving legs down labelled as A, C and E. Check out how the consecutive selling attempts were getting weaker and weaker; finally the third was so flat that it hardly produced a scalpers profit at any daily setup throughout the bear grind. Now you understand our proprietary definition of the triangle from the Glossary section. Take advantage of this technical knowledge.
The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.