**Elliott Wave Analysis of USD/JPY – July 14th, 2025**
*Original analysis by EWM Interactive*
*Rewritten and expanded by AI from EWM Interactive’s article*
The USD/JPY currency pair has long been a favorite among Forex traders due to its high liquidity and sensitivity to global financial sentiment. As of mid-July 2025, the pair has demonstrated significant corrective behavior, moving away from its previous bullish trend. This situation offers a compelling case study in Elliott Wave analysis—a tool that identifies repeating patterns in financial markets to forecast future price movements.
This article takes a deep dive into the current Elliott Wave structure unfolding in the USD/JPY pair, building upon the original insight provided by EWM Interactive, with added commentary and clarity for context.
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## Overview of USD/JPY’s Recent Price Action
As of July 2025, USD/JPY is undergoing a notable correction after experiencing a substantial bullish run. Since the peak recorded earlier this year, the pair has retraced sharply, capturing the attention of technical traders who have been keenly observing for potential turning points.
### Key Market Developments:
– After reaching highs around the 162.00 mark, the USD/JPY initiated a reversal.
– The corrective move that followed has since broken below key support zones, suggesting the end of a larger impulsive pattern.
– The current downtrend appears to be forming a complex corrective wave pattern according to Elliott Wave principles.
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## Applying Elliott Wave Theory to USD/JPY
Elliott Wave Theory classifies price movements into two categories:
1. **Impulse Waves (Trending)** – These consist of five waves in the direction of the main trend.
2. **Corrective Waves (Counter-Trend)** – These are typically composed of three waves (A-B-C) and work against the previous trend.
According to EWM Interactive’s analysis, the previous rally in USD/JPY unfolded within a larger five-wave impulsive structure. This bullish sequence has now likely been completed, leading into a corrective phase. Understanding the context of this transition is fundamental for anticipating what comes next.
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## Dissecting the Weekly Chart: A Completed Five-Wave Advance
Looking at the broader time frame first helps establish a solid foundation. According to the Elliott Wave count:
– The large upward trend from the pandemic lows in 2020 formed a full five-wave advance. This pattern is common in strong trending environments and has likely culminated at the recent top near 162.
– The wave structure from the 2020 lows seems to fit the standard motive wave configuration:
– Wave (1) initiated the bullish trend.
– Wave (2) corrected sharply but remained above the origin.
– Wave (3) extended aggressively with significant momentum.
– Wave (4) was a brief consolidation.
– Wave (5) reached its peak around 162.
This completed advanced wave structure paved the way for a larger correction to unfold next.
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## Current Development: The Corrective Phase
After reaching the top in May 2025, a strong sell-off ensued. The correction is now visible not only on the daily chart but even on higher time frames.
### Potential ABC Correction in Progress
– Wave A: The initial leg down from 162 to around 154.00 was sharp and impulsive in nature, potentially indicating the beginning of the correction.
– Wave B: A partial retracement up to approximately 157.50, which lacked the strength and momentum to reclaim the highs.
– Wave C: Now appears to be in progress, and if symmetrical, may continue dragging prices lower, likely to test levels around 149.00 or below.
Corrective waves can take several forms: zigzags, flats, or complex combinations. At this stage, the USD/JPY appears to be engaging in a zigzag (5-3-5) formation—a common outcome after a major impulse.
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## Technical Indicators: Momentum
Explore this further here: USD/JPY trading.