I have to tell you, I have never been so happy to be stopped out of a position before. After trading EUR/JPY all week, we were finally stopped out of the last part of our long position after last night's 168.40 long re-entry. EUR/JPY traded up to a 168.85-area high just a few minutes after London opened for business, giving you ample opportunities to book partial profits and/or move stops to cost. Then, sellers came in to defeat the buyers once and for all. On the whole, we managed to pull anywhere from 50-100 points of profit from this trade sequence, depending on your entries/exits, on a trade idea that actually didn't really work!. Further, the dollar was brutally range-bound all week, which means we traded one of the few pairs that was actually moving, rather well.

But why was I so happy to be stopped out? Because this week's EUR/JPY grind higher was only slightly more fun than a root canal. We watched EURJPY begrudgingly trade 40 points higher, retreat 30 pts, consolidate for 8 hours, and then do the same all over again. Wash, rinse, repeat was theme of the entire market this week. Because the price action with a weaker Yen was becoming so lethargic, I knew that if and when these Yen products broke down, trading would heat up. And heat up it did.

New York traders came in with an agenda this morning. They began hammering the Yen products driving EUR/JPY through 167.20 trendline support, along with USD/JPY through critical 121.55 support. Once those levels gave way on the downside, combined with our intimate knowledge of EUR/JPY's disdain for the upside, and a few major US companies missing earnings, I knew today was shaping up to be a real Friday wipe out. Suddenly, my memory flashed back 5 years ago (almost to the day) to a day that changed my trading career forever.

I was day-trading equities for a small company in San Diego. Like I am now, I was a fairly consistent, yet conservative trader. I was averaging a decent daily profit in a slow summer session, but not making any significant advances. Then, one night on July 23, 2002, news of Bernie Ebbers's infamous fraud at WorldCom hit CNBC and immediately sent the S&P futures down 2% overnight. I could barely sleep that night I was so excited to sit down on the trade desk the next morning. I knew tomorrow had the potential to be a huge day.

I walked in the office that day with a look of pure focus and determination, noticed my fellow traders did too, and sat down before the opening bell. I had a conversation with myself that this was the day to make my move. Well that day I traded 5 times my normal volume and bested my previous single day profit record by 10 times.

What's my point? My point is that once USD/JPY and EUR/JPY broke through such critical support levels this morning, after having been so incredibly overbought for such a significant period of time, I felt that same feeling I did 5 years ago in San Diego. I completely abandoned my conservative, half position size approach, and aggressively began shorting USD/JPY. I knew that trading from Monday to Thursday took patience and finesse, but today was different. This morning's market did not take patience and finess, it took 100% controlled aggression. The profits I made in 4 days in EUR/JPY, I more than doubled in USD/JPY in 30 minutes this morning. Days like this don't come along very often, but when they do and you can quickly recognize it and shift gears, your success as a trader will increase significantly.

We will focus on the downside next week in EUR/JPY and USD/JPY. Have a great week.

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.