- SP 500 leaves potentially important divergence
- GBP/USD encounters Gann resistance in the 1.5960 area
- USD/JPY holds a key support
To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY has come under steady downside pressure since failing last week near the 3rd square root progression of the year’s high in the 100.65 area
- Our near-term trend bias is higher in the exchange rate and will remain so while above the 50% retracement of the May to June decline in the 98.75 area
- The 61.8% retracement of July to August decline near 99.55 is an interim pivot, but only traction over 100.65 signals a more important upside resumption
- The second half of the week is a cycle turn window
- A close under 98.75 would turn us negative on the exchange rate
USD/JPY Strategy: Like the long side against a 98.75 close.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD broke above the 1×3 Gann angle line of the year-to-date high to trade to its highest levels since mid-January on Monday
- Our near-term trend bias remains higher in Cable while above 1.5755
- The 3rd square root progression of the year’s high at 1.5960 has so far capped and a close over this level is needed to maintain the immediate upside tack
- The first half of next week is a possible medium-term turn window
- A loss of the 1.5755 area on a closing basis would undermine the immediate postive tone in the pound and turn us negative
GBP/USD Strategy: Like the long side while over 1.5755.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has come under steady pressure since failing early in the month at the 1×3 Gann angle line of the 2012 closing low in the 1.05550 area
- Our near-term trend bias remains lower in Funds while below the 50% retracement of the July range in the 1.0430 area
- The 3rd square root progression of the year’s high near 1.0300 is an important pivot with a close below required to set off the next leg lower in the rate
- The first half of next week is a potential medium-term turn window
- The 2×1 Gann angle line of the 2012 low at 1.0340 is immediate resistance, but only a close over 1.0430 would turn us positive on the rate
USD/CAD Strategy: Like holding short positions while below 1.0430.
Focus Chart of the Day: SP 500
The early August timeframe in the SP 500 was extremely significant for us from a cyclical perspective. We have maintained that the high recorded during this time could lead to a more serious decline over the traditionally negative September/October period. On Monday, both the futures and fair value contracts of the SP 500 traded to new all-time highs in the overnight session. However, by the time the cash market opened these derivatives were off the highs and cash never managed to trade above its all-time high of 1710. This has left a glaring divergence on the daily charts and one that is sometimes seen around important re-test/double tops. A close over 1710 in SPX cash is needed to alleviate this potential technical negative and clear the path for a more important move higher in the index. Weakness below 1670 would greatly increase our concern that a top of importance is materializing.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in SPX in real time? Try the Speculative Sentiment Index.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX