The yen products have gapped down on the Sunday night open in response to news for the second week in a row. This adds two welcomed dimensions to the market. First, it sets the tone for traders to expect volatility in USD/JPY and EUR/JPY for the week, and second, it provides a price target at the previous Friday close for the market to move towards to close the gap. We ended trading at 112.50 on Friday and opened down at 112.20 as we currently trade 111.60. The 111.50 zone happens to be an area that I have been waiting and watching for almost three months now. This is textbook example of multiple Fib levels aligning in a powerful zone that the market is mostly unaware of because no traditional technical analysis identifies this area as critical.

The daily chart shows a beautiful bullish Gartley with legs AB and CD equaling both in price distance and momentum readings. You will notice that leg AB reached exhaustion after a -4.9 reading on the indicator, whereas the current CD leg is registering -4.8 on the Momentum Indicator as we trade 10-20 points above our target buy zone.

Down to the 13-minute chart there is a nice 2.618 Fib projection that places support at 111.50 with the RSI positive divergence confirming this level as support. We look to scale into longs in the 50's, 40's, and 30's with stops under 20 targeting the gap fill in the next 48 hours. Be aware that there is a ton of economic data scheduled in the next 72 hours, so keep your stops on the books at all times as things could bumpy without notice.

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.