The USD/JPY finally yielded to our 3rd tier downtrend line after knocking on the door for several days.  The currency pair proceeded to drop through our 3rd tier uptrend line without hesitation on rising volume.

However, volume did not reach an abnormal level, and the USD/JPY is finding support once again at our 2nd tier uptrend line.  Our 2nd tier uptrend line continues to be a reliable defense, and the USD/JPY may very well bobble between our trend lines as they reach their respective inflection points.

Though the currency pair is trending up at a crawl pace, the medium-term downtrend continues to bear down on price. Our 5th tier downtrend and 1st tier uptrend lines should prove to be the true tests as far as a longer-term trend is concerned.  Meanwhile, the USD/JPY remains in its indecisive state, apparently waiting to see whether the global economic recovery is for real.  

A significant break to the downside could cripple Japanese manufacturers and the nation's economy, whereas a breakout to the upside would likely indicate comfort in the concept of stability and future growth in the U.S.  Meanwhile, if our 2nd tier uptrend line doesn't hold, the pullback could pick up momentum towards our 1st tier uptrend line with a retest of May 22 lows.  A contraction such as this would likely require a sizeable drop in U.S. equities, and the ability of the S&P to hold 900 remains to be seen.      

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