What a difference a day can make. The market has been tip-toeing around critical USD resistance levels for days now and yesterday the market finally tore through. The markets are moving as new money is coming in, while old money is scrambling to square up bad positions. But before we get too ahead of ourselves and move every dollar in our savings accounts over to euros, let's take a look at the significance of the technical developments.

I hate to tell you this, but USD/JPY is still well contained within the 2005-2006 uptrend channel.

Not only did USD/JPY find daily trend channel support, it found .618 Fib ret and 1.0 Fib projection (AB=CD) at the exact same level of 116.80.

EUR/USD hasn't even reached the daily breakout level yet. Daily downtrend resistance and the 38.2% retracement of the 1.3667 to 1.1636 move falls in at 1.2420-40 zone, some 90 points above us. This level is extremely significant, as the result of this level test will likely determine EUR/USD's fate in 2006.

A closer look on the 4-hour chart shows a series of three EUR/USD progressions while contained within the parallel uptrend channel. The previous two progressions lasted almost four big figures before terminating to within 30 points of one another. Progression 3, which we currently find ourselves in, is two-thirds of the way there and is targeting 1.2447. A point of incredible significance, 1.2447 projection is 20 points away from the daily .382 Fib Ret and practically spot on the daily downtrend resistance level mentioned on the daily chart above. This level will be extremely important and will likely determine EUR/USD's fate for the remainder of 2006.

In terms of an intraday chart and a possible play for today, EUR/USD 30-minute chart finds itself well contained within a parallel uptrend channel with a previous retracement of 66 points originating from the 1.2290 level. Let's look to establish longs above the 1.2300 level with stops under 1.2280 targeting the upper end of the parallel trend channel at whatever point in time price and the channel intersect. You will need to draw this channel for yourself to determine your target as a sloping trendline is a dynamic target.

Swissy is the strongest of the G-6 as daily trend support was broken almost two big figures ago, while EUR/USD remains a big figure away. In fact, USD/CHF is so far ahead of EUR/USD that USD/CHF has already found a significant level of support. .786 Ret and 1.0 Projection (AB=CD) provided price support at 1.2700 level.

The next logical move for USD/CHF would be a retest of the former daily trend support at around 1.2850. If we do make it all the way back to this level, and keep in mind it would only be a 50% retracement of CD, a beautiful short setup would be in the works.

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.