We were filled on two of our three limits to get short USD/JPY for a 116.83 average. A strong combination of Fib and Elliott Wave analysis suggested a 116.85 area wave iv top. Because we are short at such a premium price, the on-going 116.20 battle is not so difficult to sit through. This is a luxury often afforded to the "levels trader."

At about 10:55 AM EST this morning, the Yen crosses moved up about 25 points with out confirmation from the US equity market correlation we have been watching. The most likely explanation was the investment banks buying USD/JPY and EUR/JPY to fill customers for the 11:00 AM EST fix. After 11:00 AM, both the carry trades and US equity markets were sold back to the lows. The crafty trader could have added to their short USD/JPY positions at the .618 ret of 116.60. This strategist was not so crafty, though.

I was crafty enough, however, to cover a portion of USD/JPY last night into our first target of 116.25 booking 57 points for the good guys. I am chomping at the bit to get my full short position back on following the first retracement of the 116.20 break. This 116.20 area has held six times since last night's Tokyo open and is surely attracting stop loss sell orders.

Ideally, I would like to see 116.20 crack, test 116.00 the figure, and then get short on the retracement around 116.15-25. Stops for everything go just above 11:00 AM Fix high of 116.65.

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.