This is the first of 3 charts which I use to support my call for a major bottom in USDJPY at 107.00-30 level, leading to a very large rally well above 140.00 in coming months. Note that this is a long term call.
First, I shall refer back to the chart of USDJPY in the 1995-1998 period as shown here. From the low of 79.50, USDJPY did wave(1) to 87.90, wave(2) to 81.70 and wave(3) to 127.50. From there, it did a very sharp correction to 110.20 and reversed. That was actually wave(4), which retraced 38.2% of wave(3). As wave(2) was a deep retracement of wave(1), wave(4) was a shallow retracement of wave(3). This satisfied the guideline of wave alternation between wave(2) and wave(4).
From wave(4) level of 110.20, USDJPY staged a huge wave(5) rally to 147.70 in Aug 1998. The primary cause was the Asian Financial Crisis which began in July 1997 with the devaluation of Thai Baht. JPY suffered a contagion from the collapse of other Asian currencies because 40% of Japan's exports went to Asia.