Tanalys

Price & Time: EUR/USD on the Cusp of a Big Break

Talking Points

Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/JPY Strategy: Like the long side while 101.35 holds.

Price Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

GBP/USD Strategy: Like the long side while over 1.6560.

Focus Chart of the Day: EUR/USD

EUR/USD has punched through to new multi-year highs this morning. While the price action of the past few days has been impressive, the single currency still has a bit of work to do before signaling the “all clear” for a more important run higher. We say that because of the chart above. It is a monthly. It shows a nice convergence of several key retracement levels from the 2008, 2009 and 2011 peaks between 1.3830 to about 1.3975. A daily settlement above 1.3970 would confirm a break of the zone and set up and eventual move towards the next confluence area up around 1.4300. From a cyclical standpoint, we don’t really see anything meaningful in the way of “time resistance” until about the second half of next week. What does concern us is sentiment. The Daily Sentiment Index (DSI) has been showing around 85% bulls over the past few days so optimism is getting a bit too one way for our liking. However, it won’t become a real concern until it gets into the low 90’s. Ideally this would occur later next week into the turn window. A daily close back under 1.3830 before breaking above 1.3970 (or very soon after) would be a negative development for EUR/USD.

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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

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