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The Fed’s plans are making one technical analyst bet against a tumbling ETF

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Trader wants to short this foreign currency

Investors are expecting the Fed to hike rates in December, and Todd Gordon says that means you want to bet against the Japanese yen.

Bond prices have been falling as expectations of a December rate hike have risen, and the yen's correlation with Treasury prices has the TradingAnalysis.com founder predicting that the Japanese currency will drop as well.

To demonstrate the correlation between bonds and the yen, Gordon compares the FXY, which tracks the yen, to the long-term-bond-tracking ETF TLT. As TLT sold off in the later part of last year, the FXY followed with an identical plunge. As bond prices steadily moved upward for the first half of 2017, the FXY did, too.

"So if we're going to see higher interest rates in December, selling pressure [may] come into the yen, which would be following the U.S. bond market lower," Gordon said Monday on CNBC's "Trading Nation."

To determine how low the FXY could go, Gordon points out that the ETF recently broke below an "uptrend support." Consequently, he sees the FXY returning to its December lows near $83.

Gordon wants to buy the November monthly 85-strike puts and sell the November monthly 83-strike puts. The trade cost Gordon 63 cents, or $63 per options spread — that is the maximum he can lose on this trade, which he will experience should FXY close above $85 on the Nov. 17 expiration. But if it closes below $83 on that day, then Gordon could actually make up to $137.

To minimize his losses, Gordon plans to exit the trade should the FXY start rising.

"If [the 63 cents in premium] gets cut to about 31 or 32 cents, let's cut the trade, contain the remaining risk and move on," he said.

FXY has fallen 4 percent in the past month, as has the TLT.