The BOJ is expected to make its interest rate decision just after 12:00 a.m. ET. By the way, the Elliott Wave and Fib patterns are lining up.  It's looking like the yen bulls might be disappointed. Currently, we look to be in the fourth of five waves up, which is scheduled to end at the distance of Wave 1 projected up from the end of Wave 4, more precisely 115.93. Notice how price has respected the projection from Wave 1 up from the bottom of Wave 2. There was at least a pause, if not a full reversal, at .618, 1.00, and 1.618. The 2.00 projected end of Wave 5 should be no different. Adding to our conviction of our target is the .786 Retracement of Wave 5 down to C.

In simpler terms, if the BOJ disappoints the hawks, USD/JPY should be at 116.00 in no time. Conversely, if the BOJ takes a stronger-than-expected stance on inflation, 114.20-30 will likely be the bouncing point. If you are still short EUR/JPY and plan to carry into the announcement, tighten your stops to within 25 points to protect profits. Please be careful trading these targets as this announcement is highly anticipated and there is a wide range of predicted outcomes.

Last night's trade idea was to get short EUR/JPY between 146.80-147.00, and I see that we made a 146.81 high bid last night at 1:06 a.m. ET. Anybody mind if I chalk that up as a win for the good guys? Personally, I was offered at 88 last night so I got no love, but hopefully a reader had some EUR/JPY to go at 146.80.

But seriously, the technical setup was solid as it nailed the top of a 200 point move up in EUR/JPY, as we trade 50 points lower from the 146.80 entry. We struggle with the 38.2% retracement at 146.20, but I firmly believe after tonight's BOJ fireworks, we will be below 146.00. So in other words, hold 'em if you got 'em.

EUR/USD briefly pushed below the monster 1.2680 level, as the DXC is threatening a 86.00 breakout. We still target the 1.2620 level as described below. I'm short a light EUR/USD position after the retracement to 1.2680 with stops above 1.2695. I'm not looking for much here, just a quick scalp ahead of tonight's BOJ interest rate announcement.

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

Disclaimer
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.