Just an unbelievable day in the global markets saw everything from a 200-point Dow decline, to a new yearly high in the 10-year bond yield above the psychologically important 5.0% to close at 5.099%, to a 200-point Sterling meltdown, and finally a predictable thrashing of the carry trades. We started the session down from our EUR/USD stop that never stood a chance under the heavy dollar buying by yield seekers. Once Sterling broke below 1.9800 and EUR/USD below 1.3450, I flipped back to my old day trading days and scalped my way to breakeven on the session on 10 times my normal daily volume.

The most notable chart is the Sterling daily chart that achieved a daily close below the 3-month uptrend line. Wave C of this correction appears to be underway with implications of a move in coming sessions towards 1.9500. For tonight, I am looking to set up shorts against 1.9800 and 1.9820 with stops just above 1.9830. The target will remain open for tonight.



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

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