Posted on Oct 12, 2022, 09:09 by Dave Toth

Today’s clear break below 13-Sep’s 68.88 low nullifies 22-Sep’s bullish divergence in daily momentum, chalks up Sep’s recovery attempt from 68.88 to 71.90 as another 3-wave and thus corrective affair we suspected it was and reinstates the 11-YEAR secular bear market.  This resumed weakness leaves smaller- and larger-degree corrective highs in its wake at 70.24 and 71.90 that serves as our new short- and long-term risk parameters from which a still-advised bearish policy and exposure can be objectively rebased and managed by short- and long-term traders, respectively.

Former 68.88-to-69.15-area support is expected to hold as new near-term resistance ahead of further and possibly steep, accelerated losses straight away.

The weekly log chart of the contract (above) and the quarterly log chart of the cash USDJPY market (below) shows the sheer magnitude of this major bear market in the yen.  The quarterly chart below shows the USD’s approach to 3Q98’s 147.62 high, the break of which would confirm the highest USD rates since 1990.  To even threaten, let alone break this major bear trend in the yen, significant, perhaps multi-MONTH basing behavior would be expected, with a recovery above 22-Sep’s 71.90 corrective high a minimum start to such a reversal prospect.  Until and unless such strength is shown, the trend is down on all scales and should be expected to continue and perhaps accelerate to levels indeterminately lower.

In sum, a bearish policy and exposure remain advised with a recovery above 70.24 required for shorter-term traders to neutralize exposure and commensurately larger-degree strength above 71.90 for longer-term institutional players to follow suit.