The market has loosened up considerably this week offering several high probability setups that worked quite well for us. There was nice two-way action in the dollar indicating that traders with differing market opinions are jockeying for position.

As quickly as the euro came into fashion, it goes out. EUR/USD players still have their eye on the weekly 38.2% Ret and 2005, 2006 downtrend line at 1.2420, but before we get too ahead of ourselves, the former 2006 highs of 1.2325 must hold. We are currently struggling with the level and a weekly close above 1.2325 is needed this afternoon to paint a picture of a run towards 1.2420 next week.

EUR/JPY has failed significantly at 145.00 after the market ran down the 145+ stops. The failure was confirmed by 1.0 Fib projection resistance and negatively diverging momentum. EUR/JPY is struggling to keep its head above the monthly trendline and while below 144.50 should be considered in violation of the trendline.

While EUR/JPY is below 144.50, we can look to play USD/JPY on the short side on a 13-minute consolidation pattern retest at the .707 retracement. Look to sell into the 117.55 level with stops above the pattern at 117.80. Target the London lows for partials at 117.05 and then trail a stop down to the 2-week support level of 116.75. Please note that this chart should be labeled as a 240-minute chart.

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.