A lot of the major pairs are at very critical inflection levels in here. EUR/USD is back for a fourth test of the highly important 1.2980 level.  USDJ/PY blew through every resistance level except for the 119.70 double top ahead of 120.00.  Cable needs to hold 1.9365 for my preferred wave count to remain valid.  And lastly, USD/CHF has a beautiful Fib zone above us at 1.2500. If USD/JPY wants 120.00 and USD/CHF wants 1.2500, then EURU/SD will certainly break down through 1.2985. Then, if our preferred EUR/USD wave count is to remain valid, price needs to maintain 1.2900 while USD/JPY and USD/CHF are taking care of what they need to care of. That sequence of events is certainly realistic in terms of percentage movement in relation to one another.

In other words, the dollar pairs are at such complex technical levels in here, entering  a new position would be nothing more than guessing. So, we should concentrate on the few pieces of market data we do know to be fact, and those pertain to the crosses. EUR/JPY has broken down out of the Q4 uptrend channel with such force that we registered a 50+ ADX reading. The last time ADX went 50 was around November 26 (shown on chart) when EUR/JPY gained five big figures in about four weeks. So now, we have a downtrend of similar strength retesting channel resistance. Lower prices could very well in the future.

The strong downtrend that pushed EUR/JPY out of the uptrend channel was in 5 waves signifying a possible corrective wave A. Since the Jan 08 low, 3 waves unfolded to the 155.40 area resistance in wave B, which leaves a likely possibility for another 5 waves down to complete corrective wave C. A 5-3-5 corrective pattern is called a zigzag in Elliott Wave Theory. For tonight, look to get short EUR/JPY on a break of 155.00 with stops 25-30 point stops. The target will remain open for tonight.

Daily and Weekly Pivot Points

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.