Talking Points
- Euro lacking momentum ahead of next week’s important cycle turn window
- AUD/USD enters into Gann cycle turn window
- GBP/USD nearing key resistance zone
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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 following last week’s failure at 1.3800
- Our near-term trend bias remains positive on the Euro while over the 2nd square root relationship of the year’s high at 1.3595
- The 61.8% retracement of the 2011/2012 decline at 1.3830 remains critical resistance with traction above required to inspire the next meaningful push higher in the rate
- A cycle turn window of importance is seen next week
- Only a daily close below 1.3595 would turn us negative on the Euro
EUR/USD Strategy: Favor the long side while over 1.3595
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD failed last week a few pips shy of the 14th square root relationship of the year’s low at 1.6495
- Our near-term trend bias remains higher in Cable while over the 2nd square root relationship of the year’s high at 1.6225
- A move through 1.6495 is needed to signal a resumption of the broader uptrend
- A medium-term cycle turn window is seen early next week
- A daily close below 1.6225 would turn us negative on the Pound
GBP/USD Strategy: Favor the long side while over 1.6225.
Focus Chart of the Day: AUD/USD
AUD/USD has been under steady downside pressure for 46 trading days since failing at the 200-day moving average back in October. A Gann “Death” cycle is 45 days (plus or minus a few days) and is a useful interval in which to be on the lookout for a potential reversal (when an instrument has been trending aggressively leading into it). The action in the Aussie seems to fit the bill and we will be closely watching the rate over the next few days for any signs of a reversal. The 9th square root relationship of the October high at .8860 and the 16th square root relationship of the year’s high at .8790 look to be the key support levels from where a reversal could try to materialize. Aggressive weakness below the latter, however, would likely undermine all potential for a turn. Traction over .8960 is required to confirm that some sort of low is in place.
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— 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
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX