A generally quiet overnight session saw a mildly bid EUR/JPY, and no real discernable trend in any of the USD pairs. We are dialing in our short USD/JPY entry to some nice Fibonacci relationships producing an exact level we would like to be short. The main premise for being short USD/JPY continues to be a test of the prior uptrend support turned to resistance on the 360-minute chart from Sunday night. But the challenge is to find where to get short against the failed trendline, since it is a moving target. The angled trendline will determine the price at which we will be short. Adding Fib relationships helps to pinpoint where on the trendline we would like to be short, should price intersect at the proper point.

The intersection of price and the trendline appears to line up at two very important .618 values. The .618 retracement of 112.93 to 111.30, and the 1.618 projection of retracement AB. If price simply traded up to 111.92 and reversed at the current time, it would be a simple AB=CD measured move. But no dice since the trendline is nowhere near 111.92. Price is required to push 61.8% past the distance of AB to find trendline resistance as well at .618 retracement.

All of this produces a nice little short setup for us. We look to get short at 112.30 with stops above 112.60 with an open target to see how the trade develops.

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

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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.