We are flat USD/JPY after a quick gain from an over-the-weekend position. Consolidation is king here as both USD/JPY and EUR/JPY remain comfortably contained within ranges established last Thursday.

I have been watching the daily Sterling wave count develop for a few days now, and continue to like what I see. Our current wave 5 is projected to end between 2.0111 (1.272 Fib Ext of W.(4)) and 2.2023 (1.0 Projection of W.(1)). This target can be reasonably expected to trade within the next 30-45 days.



Moving down to the intra-day chart, we get a look at the first wave of five within the final W.(5) move. The projected end to smaller degree wave 5 was 1.9803. This morning's high was a 1.9799 high bid, which then saw Sterling immediately knocked 30 points lower as we consolidate below the highs. If in fact we have saw wave 1 of (5) complete, we can expect a minor 5-wave pullback in corrective wave A to former trendline support at 1.9700. Rather than fight Sterling strength, let's wait for the pullback to trendline support to get long with stops around 1.9660 for now. We are playing a short term bounce in Wave B, so we're playing this close to the vest. Book partial profits and move stops to cost if 1.9740 trades.



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

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