The Dollar/Yen retreated a little bit, and found a bottom at 88.37. As we have explained several times, it seems that we are in a wave 4 correction now (please refer to the attached chart), which will ideally target a Fibonacci ratio of the wave 3 dive. But the important question now is this: is the 4th wave correction done? yesterday’s close produced a shooting star pattern on the daily chart, making us believe that this correction is probably over! Short term support is at Friday’s top 88.37, and breaking it would indicate a continuation of the drop to 87.35 & 86.47. The resistance is at 88.76, and breaking it would mean that the Dollar will continue to capitalize its latest bounce, which will ideally target Fibonacci levels for wave 3: 89.52 & 90.13. This pair is going as expected, in the expected direction, and in convergence with our negative technical outlook for the medium term. We absolutely expect the fall to continue on the medium term. But we should not neglect the enormous possibilities of a bounce up targeting Fibonacci levels: a bounce is highly probable, and it is most likely to be just a temp, but the trend is down without a shadow of a doubt!

Support:

• 88.37: yesterday’s low which was tested twice.

• 87.35: an obvious support area on the hourly chart, and Dec 9th 09 low.

• 86.47: previous well known support.

Resistance:

• 88.76: the falling trend line from Asian session high on intraday charts.

• 89.52: Fibonacci 50% for the wave 3 dive (from 92.09).

• 90.13: Fibonacci 61.8% for the wave 3 dive (from 92.09).