Talking Points

• EUR/GBP nearing a low
• EUR/USD fails again at Gann resistance
• GOLD still unable to gain much traction on the upside

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Focus Chart of the Day: EUR/GBP

The currency markets have been abuzz about an EU subsidy payment to UK farmers and its potential negative impact has weighed on EUR/GBP for the better part of a week now. The payment is reportedly worth upwards of 3 billion Euros and will price at either the ECB or London fix today. Such flow chatter is quite common in the FX markets around quarter end, but this particular one has been really hyped. The obvious expectation once this payment is out of the way is for a bounce (as traders cover) and with cross testing and holding important Gann support at .8345 this morning this is clearly a possibility. However, the real surprise move for most would be for the cross to continue to come under pressure after the payment. With an important cyclical turn window eyed around the latter part of the week a move back under .8345 would not come as a total surprise to us before a more important low is reached. Any strength over .8400 would confirm that a low is likely already in place.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD probed above the 7th square root progression of the year’s low at 1.3545 on Friday, but again failed to manage a daily close above
• While over the 1st square root progression of the September high at 1.3445 our near-term trend bias will remain positive
• A close over 1.3545 is needed to reinvigorate the upside and expose upside attractions at 1.3600 and above
• The next couple of days are a clear cycle turn window in the rate
• A daily close below 1.3445 would signal that some sort of top is in place and focus lower

EUR/USD Strategy: Like the long side while over 1.3445.

Price Time Analysis: AUD/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• AUD/USD has come under stready pressure since failing two weeks ago at the 38% retracement of the year’s range in the .9515 area
• Friday’s close below the 2nd square root progression of the month-to-date high at .9330 has shifted our near-term trend bias to negative
• The 38% retracement of the August to September advance at .9270 is a clear near-term pivot with a daily close below needed to extend the decline towards key supports at .9230 and .9165
• Some minor cycle turn windows are seen tomorrow and at the end of the week
• Only a daily close over a Gann resistance cluster at .9430 would turn the technical outlook more positive

AUD/USD Strategy: Looking to sell Aussie on strength.

Price Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• XAU/USD has moved only moderately higher since finding support at the 1×2 Gann angle line of the year’s closing low at at 1293 a couple of weeks ago
• The lack of upside momentum is somewhat disturbing, but while above 1293 our near-term trend bias will remain higher
• The 5th square root progression of the year’s low near 1350 is important near-term resistance with a daily close above required to confirm the start of a more important push higher
• Today is a minor cycle turn window
• A daily close below 1293 would turn us negative on the metal

XAU/USD Strategy: Like holding only a reduced long position while above 1292

— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved

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To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX