Yen is trying to round out a bottom. After retesting lows and not breaking, the Yen is back to retesting where it failed from April 15th with highs of 10383. This has led to a pause in the market as it consolidates builds support to continue the pressure against this level. Support is seen down to 10150 ever since the market squeezed the level and turned on the short squeeze. Squeezing above 10383 confirms double bottom and gives room to target 10883 from where the market failed early April as the Bank of Japan came out with stimulus, derailing the March bottom attempt. By coming back to this level the yen will have rounded out a bottom from 108-100-108, leaving shorts who sold the BOJ stimulus wrong. This will turn the level into support as the market will also retrace 50% of the year highs 11531-10008. Recovery above 108 will attract buyers to press the gas against shorts to target year highs of 11531 and fill gap up to 118 from November.
Equities were squeezed to new highs on the last day of trading in April as equity shorts threw in the towel. This led the Emini SP500 to take out the previous high of 1593 and put in new highs of 159550. Nasdaq completed the squeeze of taking out last year's highs of 287175. To start May, equities reversed sharply off the highs to close below Tuesday's lows. These lows now act as major resistance and what buyers need to overcome to retest highs. On the ES daily chart, the breakdown setup an outside bar bearish reversal, by opening above previous day making a higher high and closing below previous day's lows. The breakdown was fast and sharp as shorts had already thrown in the towel the day before, so they were left behind, having to come back and offer the market down as they chased back in. This gives way for the SP500 to test support down to the mid 1550s of where the market broke out after putting in a 153075 low in April as sellers failed to break the Cyprus 152950 low. Shorts have already been cleaned after failing this breakdown and ralling to take out the highs and squeezing them out. Coming into this range of support allows buyers opportunity to defend and continue the upside momentum. Failure to hold and breach of 153075 confirms a double top with room to target the year lows. Once the SP500 takes out the year lows, prices above 1440 will not be visited for a long time. A Yen short squeeze will put pressure to make this break take place.
On Wall Street, the old saying is the markets like to climb the wall of worry, and they have surely done so this year moving higher in the face of all negativity along with two attempted breakdowns in February and April. These are what we call "cracks". We like to say the market climbs higher on glass stairs. Reason being is ever since the 08 crash and 09 bottom at 665.75, the market has been VERY fragile and on life support through the Fed. As we have seen, the glass stairs have been broken several times since the ride from the 09 lows and each started with cracks first before falling through violently, flash crash and debt downgrade in 2011. The recent February and April corrections were the first cracks in this latest climb of glass stairs.