It was just incredible trading yesterday, packed with more action than we have seen in some time. Our EUR/USD trend channel pullback trade to the 1.2300 level pushed our 1.2280 stops to the brink with a nice 82 low before rocketing higher to a 1.2396 high before the close of business in New York. Keep in mind that our yearly defining resistance level of 1.2420-40 remains.

Corresponding to the spectacular EUR/USD 1.2400 failure was USD/CHF at a 1.2650 low, which I consider to be one of the best technical setups you will ever see. You have four separate technical arguments to be long USD/CHF. First, the bottom end of the big parallel downtrend channel. Second, our textbook 1.0 projected measured move, AB=CD. Third, 1.618 Fib extension of move BC. And last, there is the severe positive divergence of the 9-period RSI. Like I wrote, it was a busy day yesterday if you were in front of the screens with levels prepared ahead of time.

Let's look for continuation higher from the 1.2650 low after the 2-day resistance level 1.2775 gives way. I would wait for a confirmed break and a subsequent pullback towards 1.2775 to be on the bid for a ride up to swing point high 1.2815. The break of 1.2775 should correspond with a critical 1.2315 EUR/USD breakdown. We shorted EUR/USD into yesterday's uptrend channel retest at 1.2345 this morning after the 1.2400 failure and am targeting yesterday's 1.2290 lows.

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

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