Talking Points

• Kiwi records cyclical low
• USD/CAD tops out in turn window
• Important cycle turn window eyed for Gold

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Focus Chart of the Day: NZD/USD

We wrote at the start of last week that we were looking for NZD/USD to come under some downside pressure for a few days before resuming higher around the end of the week. This cyclical forecast looks to have played out rather well with Kiwi now testing last month’s closing high following Thursday’s low at .8230. The short-term cyclical picture still remains somewhat clear with general strength favored ( perhaps after a minor stutter step over the next day or so) into the second half of the week. It would take unexpected aggressive weakness below .8230 to undermine the positive cyclicality of the daily chart and turn us negative on the Bird.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD has come under fairly steady pressure after failing to gain much traction over the 88.6% retracement of the year-to-date range in the 1.3600 area
• However, while above the 2nd square root progression of the year’s high at 1.3475 our near-term trend bias will remain positive on the rate
• The 1.3600 area remains important resistance, but a move through the 8th square root progression of the year’s low at 1.3655 is really needed to signal the start of a more important push higher
• A minor cycle turn window is seen today
• A move under 1.3475 would undermine the immediate positive tone in the rate and focus lower

EUR/USD Strategy: Like holding reduced long positions while over 1.3475, but will look to exit and go short on a move through that level.

Price Time Analysis: USD/CAD

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/CAD failed late last week during a cycle turn window near the 4th square root progression of the 2Q13 low in the 1.0410 area
• A move under Gann support in the 1.0300 are will turn the near-term trend bias lower in Funds
• A move through 1.0410 on a closing basis is needed to undermine the potential cycle turn window and sigal an upside resumption
• A minor cycle turn window is seen during the second half of the week
• A close below 1.0300 will turn us negative on the rate

USD/CAD Strategy: Square here for a few days. Aggressive traders should probably already be short.

Price Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• XAU/USD broke below the 4th square root progression of the late August high at 1279 on Friday to trade to its lowest level in three months
• Our near-term trend bias remains lower in the metal whil below 1327
• The 1×1 Gann angle line of the year’s closing low in the 1260 area is important support with a move below needed to force a more important move lower
• The end of the week looks to be an important cycle turn window for the metal
• Only an advance through the 38% retracement of the August to October decline at 1327 would shift the near-term trend back to positive

XAU/USD Strategy: Like short positions for another few days while below 1327.

— 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