Talking Points
- USD/JPY rebounds from key short-term Fibonacci level
- GBP/USD recovers from Gann support at 1.6345 again
- AUD/USD enters into medium cycle turn window
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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 came under heavy downside pressure on Tuesday and close below the 2nd square root relationship of the year-to-date high at 103.35
- Our near-term trend bias is now lower in USD/JPY and will remain so while below 104.80
- The 161.8% projection of the early January decline at 102.85 acted as support on Monday and weakness below this level is now needed to confirm a resumption of the near-term decline
- A minor cycle turn window is seen around the latter part of the week
- Only a close over 104.85 would turn us positive on USD/JPY
USD/JPY Strategy: Sell into strength while below 103.80
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD came under aggressive downside pressure on Monday before finding support again at the 2nd square root relationship of the year-to-date high at 1.6345
- Our near-term trend bias is lower in Cable while below 1.6570
- Support at 1.6345 is critical and needs to breached soon if further material weaknes is to be seen
- A minor cycle turn window is seen around the end of the week
- Only aggressive strength over 1.6570 on a daily close basis would turn us positive on the Pound
GBP/USD Strategy: Like the short side while under 1.6570.
Focus Chart of the Day: AUD/USD
We were planning on writing today about the medium-term cycle turn window in AUD/USD over the next couple of days, but the market seems to have beat us to the punch. The resistance area at .9040/60 where Aussie has seemingly failed is potentially important as it marks a convergence of several Gann levels. Just how important this turn proves to be will depend heavily on the follow through over the next few days. The 8th square root relationship of the 4th quarter high at .8960 is an important near-term pivot ahead of critical support at .8860. Traction below the latter would confirm a broader downside resumption. There is a chance that this latest decline is only a minor reprieve before heading higher again, but only a daily close over .9060 negates the negative cyclicality.
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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