Dear friends,

I normally do not look at 1&4 hrs             TF but this set up is so beautiful that simply I could not ignore that.
You know that I am long from 107. See “Related Ideas” below. It has been two days since USDJPY             has started to make a wedge formation and this wedge has every single element of learning which we are going to review here.

In a 15 min TF price attempted to break the key support level and failed. See the first red circle. Then attempted again for the Second time and failed again. This is what we could as a False breakout of the lows and we like it Long as if makes a lower low only by a few pips. If you go to 5 min TF you see that in fact the price attempted three times and failed. By that time we did not know that we have a wedge formation.

Then after it became clear that it is a wedge formation price came back lower to retest the support line again. But see how it failed for another time, this time not even being able to get to the dotted blue line (support) and as the matter of the fact that turned out to be a false breakout again but this time a false breakout of the wedge formation.

And in a very shorter TF see the pullback now into the New support levels and EMAs

Now let’s get into the underlying markets to see why we think YEN has been weaken and USD has been appreciated. First we going to review YEN:

1) This is weighted average YEN (daily). You know that I have been bearish on YEN for weeks now. Yen has been grinding lower even though all other underlying Japanese markets suggested a very sharp fall of the YEN. The problem in my opinion was with these EMAs and see how yesterday YEN has passed it. I cannot see anything else to stop a sharp fall of the YEN for the next a few days, at least to the New neckline!

2) This is Yen futures and it is sort of self-explanatory. In my previous posts I highlighted this Flag and yesterday this Flag was broken but there has been like one day lag in FX and the YEN currency has just responded to that break.

3) Beautiful Nikkei break of the Neckline on last Friday and this Monday and see how clean it retested the Neckline and bouncing now. This is Nikkei Futures .

and see how much room Nikkei has !

To be honest the huge moves on Nikkei on last Friday and this Monday led me to invest more in USDJPY             . It was a clear signals of USD appreciation and Yen weakness.

4) This is Japanese 10 Yrs Yields and see how much upside room it has. This is equal to the Yen weakness.

5) This is Japanese bonds and see where we are now. Then neckline is about to be broken.

That was it for Yen. Now let’s look at USD