The USD/JPY broke higher last week, out of a triangle pattern that we have been tracking since mid-April. This triangle has been placed in wave four, so we must be aware of a bearish reversal in the next few days/weeks; this type of patterns always occurs prior to the final move of the larger trend. So current leg up should be our final leg; most-likely wave 5 of an ending diagonal. However, each leg in ending diagonal should be sub-divided at least by three waves, so that current pull-back is probably wave (b) with wave (c) yet to come - and that could hit the 103.00/103.50 level. After a completed ending diagonal we will be looking for a sharp reversal lower. A fall back beneath 100 would be a first but important sign for a completed ending diagonal and weaker prices ahead.

What Is Ending Diagonal?
An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final "C" wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.

Forex Analysis by Gregor Horvat at ForexPros. com