The dollar is facing broad-based resistance stemming from Fibonacci projection levels that might need to be relieved before continuing higher. The majors flashing overbought signals are EUR/USD against 1.2509 100% Fib projection down from the Aug 21 high, GBP/USD against 1.8529 100% Fib projection down from the Aug 8 high, and USD/JPY against 119.76 100% Fib projection up from the Sept 22 low.

The most notable pair calling for a pullback before continuation higher is USD/JPY. October 6 saw the inset 10 year downtrend resistance on the monthly chart broken. Though the implications are bullish, often times the trendline needs to be re-tested, this time as support, before prices continue higher. That test of support looks to be in the vicinity of 118.00.

The signal that the 118 support test is in play is a break of the smaller, inset, gray trend channel at 119.00. Sailing should be pretty smooth down to the 118.00 support zone consisting of the larger, blue trend channel, 50% retracement of the Sept 24th low to the Oct 13th high (orange), and .786 retracement of the Oct 5 low to the Oct 13th high (green).

In anticipation of that 119 break, let's offer a half position into 2.618 projected C-D resistance at the .618 retracement of 119.48. Look to get short as close to the 119.50 as you can, with stops over the .786 retracement at 116.61, say 119.75. The minimum we should look to make is a re-test of the 119.00 lows, or 50 points.

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.