Our offers to sell EUR/JPY at 147.58 and 147.78 as described earlier are still on the book. The session high was around 147.43, so all it'll take to get short is one good light volume, pre-Asian push to trigger our limits.

Along with EUR/JPY, we're going to add USD/JPY to tonight's hit list. USD/JPY formed a nice 5-wave push up this summer and has since entered correction mode when the uptrend line was broken at wave A. We are looking to get short into current wave B for the move down to 50% retracement of the entire 5-wave move at point C.

Breaking corrective waves A, B, and C down we find Elliott Wave principles are indeed well intact. For a quick review, trending moves typically show 5 wave bursts, where as corrective waves typically show 3 waves. Up to wave 5 at the very top of the chart the market was considered in an uptrend. Now, after the fifth completed, a new downtrend emerges as corrective wave A begins to form. Considering that wave A is a down wave and the overall market trend is down, we would expect 5 waves within A, which we have. They are labeled i,ii,iii,iv, and v in blue. As corrective wave A ground to a halt, wave B begins at 114.00 and shows 3 waves to the top of B at 115.75. So far so good. Now this is where the guess work comes in. We appear be back in the trend direction of this correction, which again is down, so we should expect 5 waves down to the end of C. Wave i of C has formed and we are guessing that wave ii of C will complete around tonight's test of 115.50.

A look at the 10-minute chart shows our projected end of wave ii at 115.50. Notice the 5 and 3 wave structures are clearly showing even on this small 10-minute time frame. Bear in mind that this entire chart is a C wave down. So considering we are downtrending, the down waves should be 5 waves and the corrective waves 3.

So get to the point you say. In anticipation of wave iii getting under way, we look to get short USD/JPY at 115.45 with stops above 115.70 targeting 115.00 on partials. Keep in mind we are also offering EUR/JPY so position size accordingly as we could end up long yen in two different trades.

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.