USD/JPY traded down to the .618 retracement at 116.70 giving those shorts from 117.10 and above a minimum of 40 points in the trade. The initial stop-loss risk on the trade was practically nothing at 15 points. I was awake last night when this happened and rather than booking profits at the usual .618 target, I pressed the trade and brought the stop to breakeven, and was ultimately stopped for a scratch. But as I mentioned, the reward to risk ratio on the trade was huge so you might as well run with it.

EUR/USD is in play after a confirmed and rather surprising early break of 1.2500 following the economic data this morning. EUR/USD did briefly break 1.2500 last night, but no where close enough to warrant an entry. The market is chopping around 1.2500 and I as mentioned yesterday, this is going to be a battle to break through. The entire world is watching EUR/USD 1.2500 with billions of option interest at or around this level. We are going to have to try two or three times to catch the move that finally goes.

With that being said, I'm not feeling like the market has the juice to do it this afternoon. EUR/USD is trading 1.2495-8 at press time, so if possible, close the position out for a 10-15 point loss. We are going to reload the trade at the Gartley sell formation at 1.2535 with stops above the highs at 1.2560. Look to book partial profits on a re-test of the lows to decrease your cost on the trade, and carry a piece for the eventual move down to 1.2350.

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.