The G7 did little to discourage yen shorts despite their repeated comments about the favorable outlook for Japan's continued recovery. Fundamentally speaking, it does not seem prudent to fight the prevailing trend until some quantifiable action is seem from Japanese officials to stem further Y\yen weakness.

Technically speaking, there is intermediate trend resistance just above us at 122.23, and the reasoning is as follows. The preferred wave count is shown on the daily chart below. W.1 traveled 432 points and W.3 traveled 367 points. According to Elliott Wave Theory, W.3 can never be the shortest of both W.1 and W.5. So considering W.3 has already completed within the distance of W.1, the in progress W.5 has to be shorter than W.3. The maximum price W.5 can travel for my count to remain valid 123.65 before a significant 3-wave decline sets in. A likely target is the 1.618 extension of w.(b)-w.(c) at 123.24.Or, should yen shorts (USDJPY longs) begin taking profits, the above mentioned 122.23 could possibly serve as the end of W.5. 122.23 is .618 of the distance of W1. For tonight, I'm going to sit on my hands to watch what develops around 122.23 before putting together a trade plan.



Daily, Weekly, and Monthly Pivots



We are also still targeting GBPUSD 1.9306 to complete W.C



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

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