Sovereign debt plummets as inflation fears push yields to multi-year peaks
USD/JPY
Reversal Down on the Weekly Chart (market above) and away we went lower with a Bear Flag that trumped a Daily KR Up within one day (remember my point about KRs being suspect on any Yen pairing) and finally breaking down through the Neckline (currently 109.54) last week. Since then we have just clipped the target for the Bear Flag at about 108.15. We made the low with a KR Down...and you've guessed it, the KR Down was suspect as we have possibly formed a Bullish Stick Sandwich Pattern over late last week and early this week.
So far we have had a mild follow through back over the Neckline but we've not broken the back of the high of the KR Down (109.76) move which needs to be done swiftly if the Bullishness is to carry on.
Watch this one! So what next? Well, as a guide I've pointed out above 'XI' (approximately 106.60) as a potential target for the first follow through of the Shoulder of the H+S Top and 'X2' (approximately 106.30) as the finally target for the H+S Top. Both are very close together and I think that because of that the support would be doubled...and harder to achieve. It depends on the strength of the current Bullish Stick Sandwich Pattern; if it fails then they may be on the cards. If it works then you'd need two consecutive closes over the Neckline at least and then an attack at the November low at 110.83 and the nearby 50% Fib at 111.02...that one would be key.
On balance and in the absence of closes over the Neckline I feel obliged to have the bullet point above as fully Bearish...though that Neckline is worrisome.
Support is currently at 109.20, 108.86, 108.40, 108.26, 108.15, 107.31, 106.68 and 106.55.
Resistance is currently at 109.54(dynamic), 109.76, 110.14, 110.48, 110.73 and 111.02.
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