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.
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Foreign Exchange Price Time at a Glance:
NZD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–NZD/USD traded down to the 10th square root progression of the year-to-date high near .7755 on Tuesday before reversing sharply
–The push through the 2nd square root progression of the Tuesday’s low suggests a stronger correction is underway and our bias is now positive
-A Gann related cyclical turn window here further bolsters this view
-The 9th square root progression of the year-to-date high at .7940 is immediate support
-However, only weakness under .7845 turns us negative again on the Kiwi
Strategy: This looks to be the turn we were looking for. Like holding long positions while the Bird is over .7845
Gold:
Charts Created using Marketscope – Prepared by Kristian Kerr
–XAU/USD has come under steady pressure following last week’s failure at the 1×2 Gann angle line of the year-to-date closing low
-While below 1432 our near-term bias is negative
-The 78.6% retracement of the April to May move higher at 1358 remains a key near-term pivot with weakness below needed to trigger a more important push lower
-Longer-term cycles suggest the latter half of the month will be significant for the metal – a low is favored
-A close over 1430 would alter the near-term negative technical picture and turn us positive on Gold
Strategy: Like getting long the metal around June 20th.
EUR/GBP:
Charts Created using Marketscope – Prepared by Kristian Kerr
–EUR/GBP failed the week before last at the 3×1 gann angle line of the year-to-date high and has since come under steady pressure
-While below this angle line now around .8555 our bias is lower in the cross
-A convergence of the 4th square root progression of the year-to-date high and the 38% retracement of the July to Feb advance at .8440/05 is a critical support with traction below this area needed to prompt a more important decline
-Near-term cycle studies favor weakness into next week
-A move over .8555 is needed to turn us positive on the cross
Strategy: Remains rangebound in the big picture. Is difficult to get excited about a meaningful directional move until this is resolved.
Focus Chart of the Day: AUD/USD
The 43 to 50 day “Gann Death cycle” is in effect over the next few days in AUD/USD and NZD/USD. As we have noted in recent Price Times this frequency often leads to corrections or full on changes in trend when the trend leading into them is especially pronounced. The almost 12% 43 day decline in the Australian dollar most certainly qualifies as pronounced. Tuesdays reversal from just above the 12th square root progression of the year-to-date high and move through resistance levels at .9495 suggests the start of a bottoming process. An Andrew’s line related to the May high has done a remarkable job of capping rally attempts over the past few weeks and this line currently at .9590 looks like a natural pivot. A close above will be further confirmation of a change in trend. Some backfilling before this occurs would not surprise.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in the Australian dollar in real time? Try the Speculative Sentiment Index.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX