Talking Points
- Euro reverses at tail end of cycle turn window
- USD/JPY touches highest level since early July
- GBP/USD holding above key support level
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY finally broke above the 3rd square root relationship of the year’s high at 100.65 on Thursday to trade to its highest level since early July
- Our near-term trend bias remains higher in the exchange rate while above 99.65
- A daily close today over 100.60 will be further confirmation than an important move higher is unfolding
- Some caution is needed over the next couple of days, however, as a Gann time relationship related to the year’s high suggests the rate is at increased risk of undergoing some kind of turn
- Only a daily close below the 4th square root relationship of the year’s high at 99.65 would turn us negative on USD/JPY
USD/JPY Strategy: Like the long side while above 99.65.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD is in consolidation mode above the 61.8% retracement of the October/November decline at 1.6100
- Our near-term trend bias is higher in the exchange rate while above the 3rd square root relationship of the year’s high at 1.5950
- A Gann convergence near 1.6215 needs to be overcome to prompt a more important move higher in Cable
- A minor cycle turn window is seen early next week
- A daily close below 1.5950 would turn us negative on the rate
GBP/USD Strategy: Looking to buy on weakness.
Focus Chart of the Day: EUR/USD
EUR/USD waited until the last moment of our cycle turn window (perhaps even went through it by a few hours) before reversing course early on Wednesday. The exchange rate’s failure from just under the 2nd square root relationship of the year’s high at 1.3595 looks significant from a medium-term cyclical perspective and opens the way for further weakness in the near-term. Currently we are focused on Gann points at 1.3430 and 1.3360, with a daily close below the latter needed to confirm a resumption of the broader decline. Strength back through the 9th square root relationship of the year’s low at 1.3545 would make us seriously doubt the negative cyclical view, but only a move through Wednesday’s high of 1.3578 completely invalidates the cycle.
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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