Just vicious price action has many of the top traders and organizations in the industry scrambling to cover outstanding positions, and to protect hard-earned profits into the year-end. The market is very whippy within rather outsized ranges. Aussie/Yen, for example had a 4% move yesterday, followed right up by a 3% trip in the other direction today. This is pretty wild stuff.

The incredible short squeeze up in the USD/JPY was halted below the critical 112.30 level on the New York close. I have been focusing on this level for over a week now . So I go short? Not yet, and this is why. First, EUR/JPY is showing a very similar and equally critical wave 2 resistance at 165.70, as we trade 164.98 as I write. I believe the market might want to check this level first, which could drag USD/JPY up with it.

Second, the internal wave count of this Wave C suggests a final push up in wave 5 to 112.75 will complete this correction. From there, price is likely to fall in wave 3 to levels that are well below the scope of this chart. For tonight, I am on the offer at 112.65, 75, and 85 with stops above 113.00.



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

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.