Currencies are moving hard and fast between range support and resistance producing little net change in price. This is a good thing. This tells us that traders in opposing camps are growing increasingly aggressive and a resolution is needed soon.

Technically speaking, the market could not get a daily close above .786 retracement of 1.2841, there was trendline resistance, and a shooting star candlestick pattern on the high day into that trendline resistance. All bearish signs.

Down to the 4-hour chart, I count 5 waves up and feel we have been in corrective mode since the November 10 high (that explains the choppy price action ). 5-wave impulses will often unfold within a parallel trend channel tipping you off to their true identity. Once the 5-wave advance is finished, correction will begin and price exits the channel, again alerting you to the current tend location. That channel breaks looks to be lining up at 1.2820 and we target.1.2765 for the end of corrective wave Y.

Here comes the fun part. Normally, 3-wave corrections are labeled as A-B-C. But, if they are complex corrections they are labeled as W-X-Y. And each leg of a complex correction contains a mini A-B-C correction. So within wave W you will see A-B-C, and within wave Y you will see A-B-C. Notice B and C of Y are projected.

Now, if price trades up the .618 retracement of leg A within the larger Y to 1.2839 and then fails, history will have repeated itself. Back on wave W, Leg B retraced .618 of A at 1.2876 on Nov 12 and collapsed 81 points in leg C of W on Nov 13. For tonight, if .618 retracement of B of Y holds, our target is 81 points lower, just like we saw previously, to the C of Y low at 1.2758 . The beauty of this pattern is you take the total distance of wave W and project down from the top of X, you get a wave Y target of 1.2764 as labeled on the chart, which is only 6 pts away from the 1.2758 target.

In other words, I'm looking to get short at 1.2835 and 45 with stops 25 points above my average for the ride down to 1.2760 area.

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.