The dollar is suffering from a holiday hangover as Tokyo sellers got to work right out of the gate last night. EUR/USD powered through critical resistance levels 1.2150 and 1.2200, along with USD/JPY breaking down through support levels 118.50, 118.00 and 117.80. While USD/JPY remains below 117.85, sellers are strictly in control. EUR/USD should struggle with Fib resistance 1.2280, allowing for a spectacular EUR/JPY failure at 6+ year highs.

The inset monthly charts shows the 6-year EUR/JPY uptrend, which is possibly being setup to fail on the larger 4-hour chart. Measured move AB=CD found initial resistance just below 145.00 previously this month. Price has since traded lower from the failure and into a Bearish Gartley formation. Sell patterns like this that develop at the least likely times, such as a break to 6+ year highs, are usually the most explosive trades you will find. Paul Tudor Jones once said something like the best trades of your career will likely be the ones that were most difficult to put on.

The hourly chart shows a closer look at the Gartley with a 114.25-50 sell zone. Stops are critical here as we are selling into a 6-year breakout and should be above the potentially option-protected 145.00 level. Initial target is 143.50, which if achieved, look to take a partial profit and trail stops down to breakeven for the next slide down to 143.00

Here is a look at the daily charts of EUR/USD and USD/CHF that are setting up for some pre-summer fireworks. EUR/USD faces daily resistance just uptown at 1.2325 as we currently trade 1.2230 and USD/CHF is dancing with final support at current levels of 1.2800. Longer-term traders could be a USD/CHF seller below 1.2800 with stops not closer than 50 points looking for a minimum target of 1.2500. You would need to allow for some wiggle room in here as price typically gets very choppy around the obvious, long-term technical levels.

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

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.