Education
EUR/JPY Threatening Channel Break
By Todd Gordon
Jan 8, 2007, 19:00

EUR/JPY has found a temporary bottom after 5 waves down to the 1.618 Fib Ext of the latest move. Currently, channel resistance is being threatened, which if broken, could setup a short squeeze to 155.00+.

While EUR/JPY is in possible recovery mode and EUR/USD moving higher from our 1.2985 low, our USD/JPY short trade has gone into a possible B-wave triangle consolidation.  We have seen the smaller waves a, b, and c complete within the larger B-wave triangle and could expect d-wave to find support around 118.20 before moving up to the e-wave completion on a lower-low test of 118.60, before failure to a new C-wave low. In other words, if you are still short a piece, keep the stop above 118.80 and try to wait out the consolidation.

I am watching several setups develop, but feel the name of this game is still consolidation so the best move is to sit on our hands in terms of new positions.

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

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