Talking Points

• Euro in consolidation mode ahead of the ECB
• Kiwi trend bias turns positive
• Gold at cycle turning point

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Focus Chart of the Day: EUR/GBP

Cross rates have always proven a little more difficult for us to analyze from a cyclical perspective. We assume it is partly to do with the “synthetic” nature of their pricing. Whatever the case may be, we have learned to give cross rates a little more breathing room when looking for turns. An instance where we didn’t take our own advice recently is EUR/GBP. We were initially looking for a peak in the cross around the 24th of last month near .8550. After a minor stutter step the cross pushed higher for 3 more days (into month-end we might add) to the next Gann resistance zone at .8580 before reversing sharply. While a little frustrating, such action is not uncommon. The bright side is that the sharp decline puts the cross back into a good position cyclically. We are now looking a minor recovery to develop lasting at least a couple of days (or should we say four?) after which the decline should continue if our interpretation of the cyclical picture is correct.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD is in consolidation mode above the 3rd square root progression of the year’s high near 1.3475
• Our near-term trend bias is lower in the exchange rate while under the 50% retracement of late October to early November decline at 1.3635
• The 1.3475 level is a clear downside pivot with a daily close below this level needed to signal the start of another important move lower in the Euro
• The latter part of the week is a minor turn window
• Only back over 1.3635 would turn our outlook more positive on the rate

EUR/USD Strategy: Like the short side while below 1.3635.

Price Time Analysis: NZD/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• NZD/USD found support last week just above the 4th square root progression of the October high in the .8185 area
• Our near-term trend bias is now higher in the Bird and will remain so while above .8275
• The 1st square root progression of the October high at .8440 is a clear pivot and traction over this level is needed to confirm the start of a more important move higher
• The latter part of the week is a cycle turn window
• A decline back under the 3rd square root progression of the October high at .8275 would turn us negative again on the Kiwi

NZD/USD Strategy: Square here.

Price Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• XAU/USD has come under steady pressure since encountering strong resistance at the 2nd square root progression of the August high in the 1357 area
• Our near-term trend bias remains higher in the metal while above the 1276 1×1 Gann angle line of the year’s closing low
• The 1322 area is immediate resistance, but traction over 1357 is really needed to prompt a more meaningful move higher
• A cycle turn window is seen today
• A daily close below 1276 would turn us immediately negative on Gold

XAU/USD Strategy: Like the long side while over 1276

— 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