USD/CHF traded down to a 1.2290 area low around midnight ET before rocketing a big figure higher in London and New York sessions. Buyers reversed the 75 point drop right at the uptrend support shown last night. This sort of price action is exactly the reason we want technical levels to show us violation before we enter on the retracement back to that violated technical level.

Our next trade will most likely be a play on an overbought dollar, as the dollar is working off this excess strength. EUR/USD is showing a beautiful AB=CD projected level right at the .618 retracement of leg B-C at 1.2705. Look to get long EUR/USD between 1.2705-15 with stops not closer than 25 points. The initial target will be the .618 retracement of leg C to the yet to be determined low point at D.

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.