We were stopped on a light USD/JPY position for a 30-point loss last night. The dollar direction at this point is just too tough to call, so for now, we're going to just take the setups as they come void a dollar bias until more reliable price data enters the market.

However, longer term charts are showing evidenced that USD could be in for a tough September. Spot gold charts are showing tremendous buy setups, US bond yields are re-approaching the lows, US equity markets are heading back towards the highs, and USD/JPY just could not find any follow through from that weekly downtrend line break. These are all EUR/USD bullish factors.

EUR/USD is showing a beautiful symmetrical relationship from neighboring down legs originating at 1.2942 and 1.2880, respectively, pointing to 1.2662 support. .618 retracement of all price data shown falls in at 1.2641, which forms a bullish Gartley setup. There exists a small downtrend channel within leg C-D, which if broken, has implications for another test of 1.2850.

A closer look at the trendline breaks shows the order of events that must unfold for the shorts to run for cover and us to get long. The trendline breaks opening the door for price to re-test the 1.2730 highs. Price fails there, retraces to re-test the trendline at 1.2700 and trigger out waiting bids at 1.2705 with 1.2675 stops. On the confirmed break of that 1.2730 resistance where you add another lot at 1.2735 and then move a stop for both higher to 1.2795. The initial target is the .618 retracement at 1.2790.

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.