FXstreet.com (Barcelona) - In the May 5th email on $/yen, affirmed the view that an important top was in place at the Apr 6th high at 101.40 (completed A-B-C, irregular correction from the Dec low at 87.15) and with eventual declines all the way back to the 87.15 low and even below. Shorted there (then at 98.95) and the market has indeed fallen sharply since, on way toward 94.25/35 (50% retracement from the 87.15 low, base of the 5 month bullish channel) and below. On a very near term basis however, the market is oversold with risk starting to rise for a few days of correcting and 2 yen bounce. But such a bounce (if it does indeed occur), would be seen as a correction and with an eventual resumption of the longer term declines after (see “ideal” scenario in red on daily chart below). Currently with no signs of even a short term bottom “pattern-wise”, want to stay short. Use a wide stop on a close above the bearish trendline from Apr (currently at 99.30) just in case this countertrend bounce (when/if it occurs) is larger than expected. Nearby resistance is seen at 95.65/75 (recently broken late April low) while nearby support is seen at 95.05/15 (earlier low).

No change in the longer term bearish view as the market is seen as completing the whole correction from the Dec low at 87.15 (irregular A-B-C), and with eventual declines all the way back to the 87.15 low and even below (though further downside may be limited). "Note too that the market remains within its 2 year bearish channel and adds weight to view that further, bigger picture downside may be ahead," said David Solin, analyst at FXA.com. Switched the longer term bias to the bearish side in the Apr 30th email, with only a close above the ceiling of the channel (currently at 101.50/00) putting the bigger picture bearish view on hold.