We have very obvious downtrend technical resistance in the vicinity of 119.50. Any technical or 120.00-related options could be a target when Tokyo returns from their holiday. The last time the market saw 120.00 was Dec 14, 2005, when the market first brokedown through 120.00, and then through 119.50 on the very same day (inset chart), which kick started the 11-big figure melt down into the first half of 2006. We are facing two potentially very critical levels here that could set the tone for the first half of 2007.
We showed technical resistance in both USD/JPY and EUR/JPY last night, but unfortunately I backed the wrong horse. USD/JPY charged higher through our stops towards the aforementioned 119.50 and 120.00 levels, ahead of Tokyo's first official trading day of 2007 tonight at 7:00 p.m. EST. EUR/JPY, on the other hand, must have read my column last night, because it dumped 60 points from the 158 Fib resistance zone example I went on and on about last night. Strategically speaking, however, we made the right move by selling the relatively weak Yen pair and keeping our stops to a very manageable 25 points. Take little shots, give bigger hits to be the last man standing at the end of 12 rounds is the name of our game.
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.