So the new month begins after a very busy April that saw the breakdown and breakout of many early 2006 ranges. EUR/USD broke to 11-month highs from 1.2589 as we currently trade 1.2640. Daily 50% retracement at 1.2650 is our next substantial resistance target. USD/JPY broke to 8-month lows through 113.42 as we currently trade 113.06. 111.50 is at the .786 retracement from the September 2005 breakout is our target support. Cable easily broke from 2006 highs at 1.7935 and is targeting the same market swing point as USD/JPY at 1.8500. Swissy on the on the other hand has not broken that September 2005 low unlike USD/JPY and Cable as mentioned above.

You will notice on the daily chart below that the decline into that Sept 2005 low was 841 points which took approximately 41 days to complete. The time measure is not illustrated. The current decline has traveled approximately 867 points with a current rate of 1.2380 and we are approximately 44 days into the move. Added to the time and price symmetry is the 1.272 extension from the 1.2558 low to the 1.3248 high. Both are indications that support might be in place.

The 30-minute chart shows a nice descending triangle into the Fib support zone at 1.2370. 1.2355 needs to trade in order to qualify for a breakout and then our bread-and-butter trade setup kicks in. Look to offer into a retest of 1.2360-70 level with stops over 90 targeting 1.2312 on a partial position. A descending triangle is a continuation pattern that offers an initial target equal to the distance of the widest part of the triangle projected lower from the breakdown point. In this case, a breakdown from 1.2355 projects 1.2312 as the initial target. Below that and those Sept 2005 lows of 1.2240 are in the scope.

EUR/JPY has traded significantly lower after the spectacular 145.00 failure. Uptrend support line for 2006 is currently holding price above support, but rolling MACDs and a bear flag formation indicate that support might not last for long.

The hourly chart has a purpose that is two fold. First, for a historical example of a beautiful gap fill example that we so infrequently see, and second, for a trade setup to watch for early this week. Notice that the gap-fill push broke down into two equa-distant moves labeled AB and CD. The measured move, AB=CD fell just short of the .618 retracement at 143.95. The high in the move was 85 which qualified as an official gap fill from Sunday night of last week following the G-7.  Price shed a big figure last week in a rather orderly manner to contend with the 4-hour trend support shown above as well as last week's minor uptrend support shown in orange.

A break down from 142.50 will invalidate both trendlines setting up a decline of greater proportions. Look for a clear break of 142.50 down to say 142.30 followed by a retest to short into the breaking point with stops according to your own risk tolerance. Target last week's lows of 142.00 for a partial position followed by the previous low at 141.50 for remaining. This is a swing trade for us, so position size accordingly.

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.