Chart of the Day: New Trend for the Yen?

I think the above chart was the most important development of the day. This is the chart of the Japanese Yen etf (FXY). The direction of the yen has been highly correlated with the equity markets over the last several years.

You can see that it began to break out last September, right about the time the equity markets embarked on a waterfall selloff. Today was the first day that the FXY closed decisively below its 50-day average since September 8th. That's quite a stretch.

Today's break below the 50-day, on rising volume, could be a signal that a new trend is at hand-- a new downtrend. Such a downtrend would likely provide a friendlier backdrop for equities and correlate to a stronger market for global equities.

A closer look at the chart above shows that the peak in the FXY was reached on 12/17/08, when it hit $114.61. That high was retested on 1/21/09, when the FXY briefly hit $114.42, but closed well off that level at $111.40. Technicians would call this trading pattern a "double top", which has bearish implications.

With a double-top left behind on the charts, and a break below the 50-day moving average, it looks like lower prices are in store for the Yen. I would even contemplate getting short the FXY, something that no trader has been willing to do in months.