Talking Points
- Cycle turn window here in USD/JPY
- Euro rallying into important resistance
- GOLD testing key support level
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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 reversed sharply on Wednesday from just under the 2nd square root relationship of the year’s high at 1.3595
- Our near-term trend bias remains lower in the Euro while below this level
- A move back under the 6th square root relationship of the year’s low at 1.3430 is needed to re-invigorate immediate downside prospects
- A minor cycle turn window is seen around the middle of next week
- A daily close over 1.3595 is needed to shift our near-term trend bias to positive
EUR/USD Strategy: Like the short side in the Euro while below 1.3595.
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD touched its lowest level since early July on Thursday before closing right on the 5th square root relationship of the August high at 1243
- Our near-term trend bias is lower in the metal while below 1291
- A daily close under 1243 is required to invalidate Thursday’s cycle turn window and set the stage for a further decline
- The 1×2 Gann angle line of the August high at 1291 needs to be overcome to shift the near-term trend bias to positive
XAU/USD Strategy: Square here. Metal is on big support coming out of the cycle turn window. May actually look to buy if Thursday’s low can hold.
Focus Chart of the Day: USD/JPY
We have been waiting for a clear break of Gann resistance near 100.60 to further confirm the breakout from the multi-month contracting range. Yesterday’s move through this key resistance puts the exchange rate in a very positive position over the medium-term and increases the possibility of a more impulsive advance in the weeks ahead. In the near-term, however, some caution is required over the next couple of trading days as a Gann cycle turn window related to the May 103.72 high could provide some decent “time resistance”. Key price resistance during this two-day period looks to come in between 101.60 and 101.70 as it marks a clear convergence of the 78.6% retracement of the May to June decline, the 127% extension of the September/October decline and the 2nd square root relationship/4×1 Gann angle line of the year’s high. We should probably note that on occasion cycle turn windows can actually lead to an acceleration of the prevailing trend and with the rate just coming out of a multi-month consolidation we cannot completely discount that happening here. However, traction over 101.70 is really required to signal this.
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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