Currency

Yen Relapse Reinforces Broader Corrective Count Lower

Posted 05/18/2023 10:24AM CTRJO Market Insights

Posted on May 17, 2023, 07:42 by Dave Toth

The past few days’ extent of the relapse from 04-May’s 75.40 high is sufficient to identify that 75.40 high as the end or upper boundary of another suspected corrective bounce within what we believe is a multi-month correction down from this year’s 17-Jan high at 79.19.  From this shorter-term perspective then, we’re defining this 75.40 level as our new short-term parameter from which the risk of a still-advised bearish policy and exposure can be objectively rebased and managed by shorter-term traders with tighter risk profiles.

Stepping back, the daily chart above shows the market’s encroachment on 02-May’s 73.05 low as well as 08-Mar’s pivotal 72.55 low and support that remains consistent with our broader peak/correction/reversal count introduced in 29-Mar’s Technical Webcast following that day’s bearish divergence in momentum.  This count submits that 17-Jan’s 79.19 high completed the initial 5-wave sequence up from 21Oct22’s 66.23 low and that the market has been in a (B- or 2nd-Wave) corrective rebuttal of that rally since.  24-Mar’s 78.11 high is considered the B-Wave high within this correction that warns of a break below 08-Mar’s 72.55 low.  And if/when that low is broken, there are NO levels of any technical merit shy of last Oct’s 66.23 low to hold it up.

We’ve identified an interesting pair of Fibonacci progression and retracement levels in the 71.47-to-71.18-area, but merely “derived” technical levels like these are of no matter in the absence of an accompanying confirmed bullish divergence in momentum needed to arrest the downtrend.  In lieu of such a sell-off-stemming bullish divergence in momentum that could come from a recovery above a recent corrective high like 75.40, further and possibly accelerated losses remain expected.

These issues considered, a bearish policy and exposure remain advised with a recovery above 75.40 required for both short- and longer-term traders to move to a neutral/sideline position.  In lieu of such strength, further and possibly accelerated losses are anticipated.

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