The EUR/USD broke 1.2855 resistance in a flurry of buy stops, both stop entry as well as stop loss, from the 4-hour channel to a 1.2886 high just after the IMM close. The trend is clearly up and we will be looking for pullback entries against the 1.2845 breakout point for tonight, but there is much bigger technical story being told that we will re-visit below.

Here is a look at our entry tonight against two sources of channel support. First is the large 4-hour channel resistance that has now turned to serve as support at the 1.2840 level. Added to this is the orderly 13-minute channel support, as well as projected symmetry from the 1.2790 to 1.2743 pullback, both suggesting 1.2840 could be the low in Asia before a run back towards the 1.2900 highs. Stops should not be closer than 1.2820 and don't be afraid to trade in and out of this one pre-9:30 p.m. as the volume is light.

Now it's time to take the big step back, look at the weekly, and ask yourself if we are getting caught up in the weak dollar hype. It's seems the dollar sentiment continues to be overly bearish, especially as Agent Bauer seems to have contained the terrorist threats ahead of tonight's season finale of 24, so we must remain objective about our analysis.

We cannot forget that we are still working off the excessive of a major weekly 61.8% daily Butterfly resistance at the 1.3000 level. With a level as technically significant as this, I would bet that the market will require more than these two weeks of the dance around the level before we break through. Realistically, we could go range bound between 1.2550-1.3000 for the rest of the summer. So in regards to long continuation trades in the EUR/USD, we should be quicker than normal to book profits with resistance so closely overhead. We are still EUR/JPY sellers into the 144.00 figure test as discussed this morning.

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.