• Dollar Trend and Volatility Return to the Market
• 118.40 Stands in the Way of Daily USD/JPY Consolidation Pattern Test

A much stronger than expected Home Sales number woke the Dollar bulls up for the first time this week bringing some of the much needed volatility back over from the commodity currency markets.  EUR/USD sits on a critical 1.1950 support level as USD/CHF has 1.3200 set in the sights. Let's not lose track of the big picture, though.  We are still well contained in daily consolidation patterns in Euro, Yen, Cable, and Swissy all against the Dollar.

USD/JPY is in a clear daily uptrend consolidation pattern as illustrated in the inset chart that offers 118.90 as the proving ground for sustained containment within the pattern. Before we get a shot at 118.90, there is significant Fib resistance just ahead of us at 118.40. You see 1.0 Fib projection coinciding with .786 retracement at 118.40. Normally this pattern is my 1,2 punch which calls for a trend fade 95% of the time, but I get the feeling that this is a 5% day. Use 118.40 to trigger longs into the daily pattern resistance at 118.90. You could establish a partial position ahead of 118.

Disclaimer
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.

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