Dollar weakness has sent Euro and Canada to historic highs against USD. We took a sizable stop in USD/JPY last night, which has forced me to step back and reassess our 4th wave count. We have to now consider the possibility that we are in a 4th wave triangle that is in the middle of the ‘D’ wave down, with the ‘E’ wave up left to go. Wave ‘D’ should complete around 113.75, before a final move back up to 116.00, which completes the entire wave 4 correction.

For tonight, I am looking to get short into the .50 and .618 retracement at 115.15-115.45 with stops just above 115.65. From there, we can expect a 3-wave move back towards 114.00, but not much below 113.50.

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Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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