$/Yen, Wedge In A Wedge

In $/yen, no change in the longer term view as the slowing downside momentum for over the last 1 1/2yrs, suggests that the market is in the process of forming a major bottom (for at least a few years). Still appear to be forming a large falling wedge over that time, a bottoming pattern that breaks down into 5 legs, before resolving sharply higher. 'Ideally' this continues to point to a test of the long held 84.90 area (Nov low), and even temporarily below first (see weekly chart below). But with the bigger picture downside seen limited and always the chance for a shortened final leg (wave 5), don't see enough potential to warrant switching the longer term bias to the bearish side here, and instead would just be patient to allow this longer term bottoming to play out.

Nearer term no change as the market is seen within an extended period of wide, downward ranging on way toward the eventual 84.90 and possibly below (see longer term above). From a pattern standpoint, the market appears to be forming a smaller falling wedge since late May, within a larger falling wedge from early May. These patterns generally break down into 5 legs and with the recent new lows seen as the final leg in the smaller wedge (wave 5), suggests that an upside break of the ceiling may be ahead (currently at 87.45/55). Note too that technicals did not confirm the recent low (see bullish divergence on the daily macd at bottom of daily chart/2nd chart below), adding to this near term positive view. However, this recent low is also seen as wave III in the larger wedge from early May, suggesting gains back to the ceiling (wave IV, currently at 89.10/20), and then a final downleg all the way back to new lows over the next few weeks/month (within wave V, see 'ideal' scenario in red on daily chart/2nd chart below). Hopefully I have not completely confused you, but the important thing to remember is that the market likely remains within its extended period of wide ranging, with a downward bias (wedge within a wedge). Positionally, still short from the July 19th resell at 86.80 and given the risk for an upside resolution of the smaller wedge nearby, would use a very aggressive stop on a close above the week long bearish trendline (currently at 86.50/60), but with the expectation of reselling at higher levels if taken out. Key support remains at the base of the wedges (currently at 85.30/40) and 84.90 (Nov low).