Carry Trade – Weekly Analysis

CANDLES

Just three sessions were enough to materially alter the technical landscape. A Three Black Crows formation on the daily chart cascaded into higher time frames, resulting in Bearish Engulfings on both the 15D and weekly frames, accompanied by decisive breaks below key technical support levels. The daily and 3D trends have now shifted firmly bearish.

Although the final three sessions of the week may resemble a potential Ladder Bottom, any rebound from this pattern is likely to be limited in scope given the structural damage sustained on the larger time frames.

The carry trade has now flipped bearish, a development that could exert meaningful pressure on broader markets over the mid term.

ELLIOTT WAVES

The long-term targets for the USD/JPY pair remain intact. However, the recent price action has prompted adjustments to the projected path, particularly regarding wave 4.

Wave 4 now carries an increased probability of extending with an additional swing lower, potentially developing into a classical bullish flag structure. While precise timing remains difficult to forecast, current estimates suggest a possible drawdown phase lasting approximately two to four months before the broader trend resumes.

Summary

The carry trade has shifted decisively bearish in the short term, with recent technical deterioration suggesting further mid-term pressure. Momentum has weakened, key support levels have been broken, and the structure now points to a potential multi-month consolidation or drawdown phase, possibly unfolding as an extended wave 4 or a classical bullish flag.

That said, the very long-term outlook remains bullish. The broader structural targets are still intact, and the current weakness appears corrective within a larger uptrend. Once this mid-term adjustment matures, conditions could realign for the next leg higher.