The top-heavy US equity markets, combined with increasing US borrowing costs, are driving traders away from positions that have exposure to increasing global market volatilities. Included in the market's definition of exposed position is the EUR/JPY carry trade. The breakdown from 163.25 trendline support completed the end of a fifth wave diagonal that has extremely bearish implications once broken. Thus far, a fierce wave-A correction has unfolded in 5 waves down to the 161.75 low, which setup this current wave-B pointing to a retest of the broken trendline support in the 163.15-45 zone. I will be setting up trade parameters to get short into this zone for tonight's session.



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

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