USD/JPY staged an impressive recovery recapturing almost 50% of yesterday's meltdown. The recovery, however, may have been too impressive and clipped your 25-area stops. I still believe USD/JPY should bounce from the former channel support-turned-resistance and remain below the 122.30 area.

Technically speaking, I believe we are in a wave b correction, which if compared to the previous wave b, will be equal in terms of distance at 122.28. 122.28 is also the location of the channel resistance, as well as the 50% retracement. I am very tempted to take a smaller-sized short position at current levels with stops above that .618 retracement at 122.63. But that would be just too easy. It's too easy because it feels like the whole market is trying to put this same short trade on at the current levels. When the whole market begins to think alike, it usually pays to look the other way. I have no positions right now and will be waiting and watching for more clues to what hand the markets is holding.



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.