The dollar has moved into critical resistance levels and the resulting breakout or failure from these levels should set the course for the next few weeks. The 10-year yield has hardly budged during this recent dollar run up and gold remains strong, which tells us that selling dollars here is probably the smart move. However, considering the strength of this dollar up move that we're about to step in front of, a premium entry price is of the utmost importance.

USD/CHF will be our first shot at selling dollars. The technical setup is as clean as you'll find, and I still believe that EUR/CHF risk is lower. A channel test of 1.2485 will likely send RSI well into overbought territory, which should be just enough to send bottom-picking longs to the exits, and new shorts to the table. Stops above 1.2500 and keep the target open for now. Watch Japanese Q3 GDP. This will almost definitely put a move into the market, so be sure your stops on remaining EUR/JPY longs from last night are in place.

Here's the same chart, but with the Fib levels overlaid furthering the case for 1.2480-90 resistance.

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.