We have a nice gap to kick off the new year. USD/JPY is just above the channel breakdown point at 118.50, and if we can get through this level, selling could accelerate as USD/JPY really felt like it was being propped up towards the end of 2006. Let's look to get short a half position at 118.50 on a stop entry with an open target. Keep your stops to about 25 points on the first position. We'll look for another setup tomorrow to establish the rest of the position.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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