The Dollar/Yen broke both the support and resistance specified in yesterday’s report without being able to create massive moves in both cases. Therefore, and although we believe the possibilities of a rising correction are higher now, we do not see a lot of changes to the technical outlook. The Dollar/Yen had previously reached our 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 85.61, and breaking it would target 84.70 first, and would also indicate that we are already moving lower with the objective of breaking 84.70, 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 86.21, and it is a pretty important one, since it represents the last in the “peak-and trough” series clearly appearing on the hourly chart. Surpassing this level will be very positive for the short term. If this happens, we will target 86.86 & 87.49.

Support:

• 85.61: short term 38.2% Fibonacci level.

• 84.81: Nov 27th 2009 low.

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

Resistance:

• 86.21: Aug 10th top.

• 86.86: Aug 2nd high.

• 87.49: Jul 29th high.