Our USD/JPY bids at 110.65 missed by just a few points before trading up 15 points into the New York close. We will be leaving them as is based on the strength of the buy pattern setting up on the hourly chart. Remember we don't force entries by chasing price. We are technical traders who accept only technical entries. I will address this later on as I want to get the updated posted as soon as possible because USD/JPY is hanging around our entry price.

USD/JPY has traded lower to retest the major hourly downtrend channel shown in gray, but as support from above. Remember, what was support becomes resistance in all forms of technical analysis. A Gartley buy pattern is forming above 109.65, offering a nice long entry with stops below the 109.50 half figure, and preferably below today's low of 109.30 if it's within your risk tolerance. We target the .618 retracement of the major A-D move down at approximately 110.50.

A closer look at the hourly Gartley pattern shows the AB-CD move down into our favorite .786 retracement at 109.64. A Fib extension of move B-C is also needed to complete the Gartley pattern, but I have left it out for clarity's sake. Momentum is diverging as price pushed lower from minor support B indicating that price is moving lower at a slowing rate. We are looking to take advantage of pockets of extremely low liquidity between the New York close and Asian Opening to get a light push down below 109.70 to fill our waiting bids. Then when the Asian volume comes in, it's hopefully off to the races.

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

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