We saw mostly consolidation following a monster dollar move in the past 2 trading sessions. It feels like the big money players are waiting around to see what the other one is going to do, kind of like a group of kids standing around a cold pool waiting for other kid to jump in. We are still bidding for USD/JPY based on the analysis from this morning, but we are going to make one change to the stop loss based on pivot point analysis.

Pivot point analysis has been around since the early floor traders in the late 70's and has remained effective 25 years later. Its popularity began in the physical commodity markets in Chicago and transcended to other trading markets with the onset of electronic trading. Essentially, it's a formula based on the high, low, and close to arrive at three support levels (S1,S2,S3) and three resistance levels (R1,R2, R3) to help us determine our entries and exits. The real value of pivot points however, is when they coincide with Fibonacci levels.

Our stop for USD/JPY needs to be just below daily S1 at 115.51, say 115.45.

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.