The Dollar/Yen dropped in the down wave we have talked about, it broke the support specified in yesterday's report 86.25, and successfully reached the first suggested target 85.52. With this, the first target of the falling wave is met, 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 84.81. 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 85.31, and breaking it would indicate that we are already moving lower with the objective of breaking 84.81, and reaching lows not seen in 15 years. This break will target 84.81 first, then 83.87. The resistance is at 86.02, and if broken, we will target the important 86.81, then 87.49.

Support:

85.31: Asian session low.

84.81: Nov 27th 2009 low, and the low of the last 15 years.

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

Resistance:

86.02: the falling trend line from 88.10 on the hourly chart.

86.81: Jul 26th & 27th lows, and an obvious hourly support.

87.49: Jul 29th high.