The market movement of the past weeks after the recent earthquake in Japan has convinced me that a major top on Japanese Yen is in place.

Fundamental
- Possible further money printing by the Japanese government (like what has been done by the Fed in QE1 and QE2) to fund reconstruction work in Japan which would depreciate the Yen in long term.
- USDJPY is more than 10 percent below Japanese exporters' breakeven rate and thus putting political pressure to bring down the Yen.
- G7 intervention and promise to put a floor on USDJPY at the 80 level.

Technical
- The weekly chart of CurrencyShares Japanese Yen Trust (Symbol: FXY) shows a long upper with ultra high volume signaling major reversal.
- A double top pattern is identified with the first top formed on the week of 1st November 2010 and the false breakout on the week of 14th of March 2011 serves as the second top.

Trading Ideas
The simplest way to play this setup is to buy the USDJPY pair at the spot market on margin at current level with a stop below the March 16th spike low at the 76 area. Yes, the stop is huge but considering this is a long term trade with a target of the 110ish area, the risk to reward ratio is more than acceptable.
If one has faith on the G7 that they will not allow a dip below 80 on USDJPY, a safer way to trade this is to sell a Bear Call Spread on FXY above the 125 level.



Matter of Concern
- Volatility causing a position to be stopped before going the desired direction. As the saying goes, "market can remain irrational longer than one can remain solvent."

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For the past few days, traders' attention was mostly on the banks particularly Citigroup (Symbol: C) and AIG (Symbol: AIG).



After forming a double bottom back in the mid of February, Citi has since rallied more than 20% making a near term high of 4.22 on Friday's session. This high could not hold itself and ended the session closing down 5% thus forming a bearish engulfing pattern as seen on the chart above. While this may not be a short signal, traders who are long on this stock should stay cautious and should even take some profit off the table. Support is expected at the 3.80 area.

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So EURUSD has made it on the final trading day for the week. It rallied more than 100 pips hitting resistance at the 1.3800 area during the London session.



Though there were no setups for my intraday trading, the weekly chart looks perfect for more bullish action in the coming weeks. I bet many traders stalking this pair would have been waiting for this green solid bar formation. This green bar with higher low and higher high which comes after 3 dojis that bounced off the 61.8% Fibonacci support confirms its bullish reversal.

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A profitable Breakout Retest setup emerged on the EURUSD yesterday.



Buying at 1.3605, stop was set just a few pips below the 200 SMA at the 1.3590 area. Position was exited at the 1.3665 area after a long topping tail spotted on the 30 minutes chart, yielding 4 to 1 risk reward ratio.

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False breakouts are all over the place especially in the lower timeframe charts. There was a good example on the 5 minutes chart of EURUSD earlier in the London session today.



The earlier breakout on the chart above failed miserably. Traditional breakout setup would have triggered a trade on the close of the solid green candlestick, only seeing it collapsed thereafter. Immediately, there was another breakout to the downside. But then how would one know that this break has a high probability of success? Patience. Wait for the retest and observe the pace aka the momentum of it. Ideally, the retest should be slow in pace which is a very useful tool I learned from Toni Hansen. Just compare the retests of both breakouts in the chart.

The trade worked out nicely and exited on a first higher lower.

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