The Dollar/Yen broke the support specified in yesterday’s report at 85.16, and dropped to 84.70 which is a 15-year low not seen since June 1995! Later, it consolidated above 85, and corrected the drop up to short term Fibonacci
50% level at 85.46. With this, we have finally reached the main target of this falling wave, which we talked about for the last 2 weeks: a drop below 84.81 & a new 15-year low, but what are the next targets? In the attached chart, which is a weekly one, we can see the falling channel from Sep 07 top. Although the bottom of this channel is very far away, and is just above 74, but there is an interesting trend line inside it, combining the monthly lows of Dec 08, Jan & Nov 09. This line is around 82.65 currently, providing us with a perfect target for this dropping wave, since we still expect, as we did before, that it will dive below 84.70. Therefore, we expect the price to reach this target, and as we do, we also realize that the limited volatility of this pair indicates that this will take some time. As for the short term, the support is at 85.28, and breaking it would indicate that we are already moving lower with the objective of breaking 84.81, and reaching lows not seen in 15 years. This will target 83.87 & at a later time, we still believe in our 82.65 target. The resistance is at 85.90, and if broken, the price will continue its bounce, targeting 86.43 & 87.49

Support:

• 85.28: important intraday level.

• 83.87: Fibonacci extension level 138.2% for the falling wave from 86.86, compared to the wave which started at 88.10.

• 82.65: the trend line combining the monthly lows of Dec 08, Jan & Nov 09, on the weekly chart.

Resistance:

• 85.90: short term Fibonacci 61.8% level .

• 86.43: the top of the rising corrective trend channel on the hourly chart.

• 87.49: Jul 29th high.