The EUR/JPY approach to all-time highs was well contained in the parallel uptrend channel shown below. But now, the channel support is a distant memory and currently serving as EURJPY resistance. 38.2% retracement is also on the job of trying to keep EUR/JPY below 146.00

Dropping down to the 30-minute chart, we get our favorite AB=CD measure move into Fib resistance, in this case .786 retracement at 145.96. Look to get short between 145.90 and 146.00 with stops above 146.20, preferably 146.25, targeting 145.25 on the initial piece of your position. If you take profits on a partial at 145.25, bring your stop to breakeven and ride EURJPY for as far as she will take us.

Two false breaks that held above 1.2700 prevented our short entry from last night. The setup remains valid, but the markets are quickly settling into an early summer range. We must use more discretion in our trade selection as we move deeper into the often quiet summer months.

With that being said, there are some interesting developments in USD/JPY supporting our stronger dollar theory. USD/JPY is showing signs of a magnet level above us at 114.80-90. Furthering our conviction in this level is the price action that developed on July 6-7. 114.85 initially served as strong support that put a 50-point bounce in the market, before ultimately failing which triggered a 150-point slide in the market. We are looking to get short on an approach of this key level.

Our bread and butter AB=CD to .618 retracement has formed targeting guess what, 114.85. So we know where to play this significant level, but wouldn't it be nice to know when we might play it?

With the help of trendline confluence, we do in fact know when price might trade 114.90. All we need to do is look for point on the chart that finds Fib intersecting the trendline in a relatively tight zone of confluence. Placing my cursor over this spot pinpoints the time to just after the N.Y. close on Wednesday.

In the meantime, we will be looking to scalp USDJPY long above 114.00 on small trades up this significant level, while keeping an eye on EUR/USD below 1.2700.

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.