Commentary
Possible EUR/JPY Wave 3 of 3 in Formation
By Todd Gordon
Jan 11, 2007, 16:30

We are going to continue to monitor the 1.2900 EUR/USD and 1.2500 USD/CHF levels, and also get back on the EUR/JPY train headed downtown. We should begin to seem some acceleration lower after the trend channel break that found resistance against .382 retracement. Notice the high ADX reading accompanying the break, which indicates downside follow through is likely.

A look at the 30-min wave count points to a retest of 155.00 to end the intermediate wave 2. If price does hold 155.00, intermediate wave 3 of primary wave 3 will kick into gear, which should provide some nice downside follow through to the recent 153.80 lows. For tonight, look to get short between 154.85 and 155.05 with stops just above 155.20.

Sterling is yet another one of the majors at a technically significant level. Uptrend support is being tested as we speak and could be a major determining factor for first part of 2007.

On the top of the daily uptrend support is a nice A-B-C pullback with possible A, C symmetry at the .786 retracement of wave 1. Not surprisingly, but the level winds up being at another whole number, 1.9300. Longs could be put to work here with stops not closer than 20 points or larger than 50 point. So for tonight we're watching EUR/USD 1.2900, USD/CHF 1.2500, USD/JPY 120.00, and GBP/USD 1.9300. Very unusual?!

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

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