Can this Elliott Wave Setup Send USDJPY Go Downhill?

The Daily chart of USDJPY reveals not only the recovery from 104.450, but also the preceding decline from 112.416. As visible, it is a five-wave leading diagonal pattern, labeled (i)-(ii)-(iii)-(iv)-(v) in wave 1. The five sub-waves of wave (i) can be recognized, as well.
Ending diagonals form in the position of the first wave (A Or 1) of the larger sequence, which means that the overall bias is bearish.

According to the Elliott Wave theory, a three-wave correction follows every impulse. This means the recovery to 109.296 by 30th October is hardly the start of a new uptrend. Instead, it is most likely a simple (a)-(b)-(c) zigzag correction within the larger downtrend from 112.416.

Note how the 61.8% Fibonacci level discouraged the bulls in wave (c), and the entire recovery formed a wedge pattern. Those are confluence that the entire 5-3 wave cycle is complete.

If this count is correct, we can expect the trend to resume in the direction of the impulsive sequence. Targets below wave 1 low (104.477) make sense for USDJPY in the weeks ahead.

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