Yen may pull back to about $108 in $XJY for another good chance to push high

The yen's sharp drop after what looked like a 5-wave move up suggests it's in pullback or correction mode. So what to expect? First I find it very significant that it retested above $111.49 in $XJY - a long term pivot I've described before. I checked Tony Caldaro's public charts on the yen (which I've posted below under my charts - thanks Tony!)(you can always find his public charts at his Objective Elliott Wave / Elliott Wave Lives On site, in the list at right). If I understand his wave count, he's thinking a wave "b" pullback before a very important "c" wave completion upward. Makes sense to me because, having retested that $111.49 in $XJY, I don't expect a failure before seeing the yen move to yet higher levels (indicated on my charts below). So, for a pullback, the $108 area in $XJY looks reasonable based on percentage pullback and prior chart price support.

Obviously, if it loses $102 in $XJY, then the picture changes to be more bearish this currency trade. As for dollar implications - one expects the dollar to benefit from yen weakening for the pullback. Then there's the euro - which we'll look at separately later. For now, traders may want to play the pullback, then look for another good rally leg up later on.