The yen has had two sharp rallies since we first discussed the prospect of a collapse to 95. However, after last week’s news that Japan plans to double the money supply, no one should doubt the BOJ’s determination to compete and win in the global Olympiad of currency devaluations. More immediately, we should see at least a token bounce from the 1.0140 downside target shown in the chart. (It was breached by 0.0021 points on Friday, but that’s not enough to be significant from our perspective.) In a bigger picture, referencing the monthly chart, a further drop exceeding 1.0028 would extend the ongoing impulse leg through a third ‘external’ low. This would be an enormously powerful thrust that promises to beget not only a spectacular bear rally, but a kamikaze follow-through leg to the downside. _______ UPDATE (April 9): So much for the bounce from what had looked like a good support. Now 1.0149 is presumptive resistance, and any rally to it should be shorted using camouflage that holds theoretical entry risk to six ticks or less. _______ UPDATE (April 10, 2:59 a.m. EDT): Yesterday’s rally topped at 1.0148. If you shorted there, please let me know in the chat room so that I can establish tracking guidance. You should have covered at least half the position on the pullback, which reached a so-far low of 1.0070.
