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.
Foreign Exchange Price Time at a Glance:
GBP/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–GBP/USD failed the week before last at the 38% retracement of the year-to-date range in the 1.5400 area
–Weakness that has followed has not been steady, but the break below the 1.5285 1st square root progression from the month-to-date high has shifted our bias lower
-Immediate focus is on a convergence of several key Gann levels and the 38% retracement of the March to April advance in the 1.5195 area with weakness below needed to signal a broader downside resumption
-Very minor cycle turn windows seen on Wednesday and early next week
-A convergence of Gann square root progressions related to the year-to-date range in the 1.5325 area is immediate resistance with traction above needed to turn the technical outlook more positive
Strategy: Want to see 1.5195 give way before getting short. Looking to sell a break.
GOLD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–XAU/USD touched its lowest level in over two years last week before finding support near a Fibonacci projection related to the January and March highs in the 1320 area
-Rebound that has followed has been unimpressive and our bias is still lower in the metal
-Immediate focus is on a Gann convergence in the 1395 area, but weakness below 1320 really required to signal the resumption of a more important move lower
-Cyclical picture is bit muddled here, but next couple of days should shed some light
-The 38% retracement measured from the March high in the 1434 area is immediate resistance, but only a clear break over 1505 turns us positive
Strategy: We see scope for the metal to turn lower here or in a about a week. May look to sell against Monday’s high if some convincing weakness is seen over the next few sessions.
NZD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–NZD/USD failed near the middle of month at the 88.6% retracement of the late 2011 decline
–Subsequent weakness below the 4th square root progression from the year-to-date-range near .8525 has turned us negative on the Bird
-The 61.8% retracement of the March to April advance in the .8355 area is support with weakness below needed to setup the next leg lower towards .8300
-Short-term cycle analysis indicates Wednesday and Monday are potential turn windows
-The 50% retracement of the decline from the year-to-date high in the .8525 area is key resistance and only strength above this level turns the technical structure positive
Strategy: Like the short side, but going to try selling on strength in the days ahead.
Focus Chart of the Day: EUR/JPY
We highlighted the potential for a turn in EUR/JPY on April 11th as it was a perfect 8.6 month Pi cycle from last year’s late July low. The cross proceeded to selloff rather abruptly losing about 6 big figures before grinding higher over the past week. The jury is still out on the importance of the turn window as price has so far been unable to overcome the 131.10 peak. From our perspective this could just be a re-test before heading lower or the 6 big figure decline last week could have been the whole reaction. Strength over 131.10 in the days ahead would be a powerful signal that the broader uptrend is indeed resuming. Weakness, on the other hand, below today’s 127.85 low will favor the deeper correction scenario.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
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