The recent equity market and carry trade correlation proved to be as intact as ever today. Following weaker-than-expected New Home Sales, EUR/JPY and DJIA sold off in tandem to 10:30 a.m. ET lows. Then, in tandem, buyers came into both products and posted New York closing prices that left most traders shaking their heads. The DJIA closed right at pre-Home Sales level of 12,417, down 11 points on the day after being down 114 pts, and EUR/JPY closed 8 points above pre-Home Sales level of 157.36. We are still short EUR/JPY by the skin of our teeth with our 157.65 stops on the book.

The inset USD/JPY chart shows the possible termination of the 4th wave with a new count. That 4th wave, provided my count is accurate, completed just this morning at 118.40. I am short a small USD/JPY position at current rates with stops over 118.45 for the possible trendline break at 117.85.

We have inflation-related data out of Tokyo tonight at 7:50 p.m. EST that has the potential to move the market, so please, use stops.



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.