USD/JPY gave us a quick false break lower on the 118.50 stop entry and knocked us for 25 points. USD/JPY still feels very heavy, however, over the next 24-48 hours on this upward trend channel. But before we break lower, traders are first looking for the Friday to Sunday gap down to be filled.

If the gap is in fact filled, a nice 42 point measured move will point us to .786 retracement in the 119.00-05 zone. Some of you might recognize this as a bearish Gartley pattern. For today, I am looking to re-offer USD/JPY in halves at 118.88 and 118.98 with stops just above the highs at 119.15 area. I apologize for saying re-offer, because I scalped a little USD/JPY short at 118.88 already this morning based on the .618 retracement. But the move towards .786 retracement should be the defining level. Keep targets open for now. I will have a longer-term look at EUR/JPY forthcoming early this afternoon.

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.