Talking Points
- Several Fibonacci timing relationships converging next week in the metal
- EUR/USD in consolidation mode below key level
- USD/CAD 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 has traded in a sideways to lower range since failing earlier in the month at the 78.6% retracement of the March to April decline in the 1.3900 area
- Our near-term trend bias is positive in the Euro while over 1.3730
- A move through 1.3900 is required to signal that a new move higher is underway
- A very minor cycle turn window is seen today
- Only weakness below the 2nd square root relationship of the year’s high at 1.3730 would turn us negative on the Euro
EUR/USD Strategy: Looking to buy on weakness against 1.3730.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has moved steadily higher since finding support at the 4th square root relationship of the year’s high in the 1.0855 area earlier in the month
- Our near-term trend bias is higher in Funds while above 1.0910
- Interim resistance is eyed around 1.1030, but a more important pivot come into play at a key Gann/Fibonacci convergence in the 1.1055/65 region
- Minor cycle turn windows are seen tomorrow and at the end of the week
- A move under 1.0910 would turn us negative on the exchange rate
USD/CAD Strategy: Like being square. May look to buy on weakness later in the week.
Focus Chart of the Day: GOLD
The compression in volatility in the FX space is making cycle analysis much more challenging as identifying what is a significant swing point in such an environment is extremely difficult. The good news is that historically such low levels of vol are usually followed by periods of high vol as it reverts to its mean. The second half of 2014 should see volatility pick up if history repeats. For the meantime, we will focus on markets with the clearer cyclical picture. Gold has fit this bill since peaking during a key cycle turn window back in mid-March. The recent month-to-date high in the metal also came just after an important turn window. The next couple of days look to be a minor cyclical pivot for the XAU/USD, but the real window of focus is around the middle of next week as a couple of Fibonacci time relationships will be converging at this time. Continued weakness into this period would likely set up an important low.
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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