One of my favorite charts formations is the wedge, or triangle.
The yen has not been able to decline against the dollar since the start of the Mar 06 stock rally although it's fallen dramatically against the euro, pound and Australian dollar in that time. The year to date picture is somewhat similar; the yen has managed to decline by about 5.5% to the greenback as the S&P recovered to just below the break-even point. And while the yen made a similar move against the euro, it's fallen about 13% against the aussie and 9.2% against the pound.
What this means is that overall, the trend for the yen to weaken as the S&P improves is intact. Stocks should continue to improve as long as the data supports the move, although the inevitable profit taking moves will no doubt occur. For now, things look quite expensive which is why I closed my long positions.
With price closing below the triangle on Friday, it's worth it to stay short here as UJ perhaps tests the support in the mid to upper 95's.
