The relentless yen buying continued in lock step with US equity selling today as traders are becoming increasingly risk adverse. The internal wave structure of USD/JPY suggests this nasty wave 3 down originating from 121.63 could terminate at around 114.65. We closed in New York at right around the 115.30 lows, so the W.3 target is well within Tokyo's reach.

USD/JPY has just rallied 40 points from the 115.20 lows. It might be smart to offer into 115.65, 75 with stops above 85, but I have feeling we might be trading against light BOJ intervention buying. That could work out ok, but rather than getting short for a final push down into 114.65, I would rather trade with the BOJ and be waiting down below on the 114.65 bid. Stops for the whole position will be just below the late '06 lows of 114.43, and will be looking to take profit at the .618 retracement of yet-to-be-completed wave v down originating from 116.24.





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

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