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:
USD/JPY:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY is consolidation mode below the 7th square root progression of the last month’s low in the 100.65 area
- Our trend bias remains higher while above a key Gann convergence in the 98.50/70 area
- A clear break of 100.65 is now required to set up the next significant move higher
- However, a medium-term cycle turn window is seen between Tuesday and Thursday of next week
- The 38% retracement of the April to May advance at 99.45 is immediate support, but only aggressive weakness below 98.50 would turn us negative on the dollar
Strategy: Like holding long positions in USD/JPY while above 98.50.
USD/CAD:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD continues to meander around key the 100% projection of January to March advance in the 1.0540 area
- So far Funds has been unable to gain any traction above this level and a close over 1.0540 is needed to signal the start of a renwed push higher
- Medium-term cycles studies point to early next week as a possible turn window in the exchange rate
- The 78.6% retracement of the 2011 to 2012 decline near 1.0445 is now immediate support
- However, only a close below 1.0370 would alter the near-term positive structure and turn us negative
Strategy: Like holding long positions while above 1.0370.
Gold:
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD continues to consolidate just above the 1×3 Gann angle line of the October high in the 1229 area
- While below key long-term retracement support turned resistance at 1301 our trend bias has to remain lower in the metal
- Weakness back under 1180 is needed to signal a downside resumption
- A very minor cycle turn window is seen early next week
- Only aggressive strength over 1301 undermines the negative outlook and turns us positive on the metal
Strategy: Reduced short positions favored while below 1301
Focus Chart of the Day: SP 500
The SP 500 has reacted very well since reversing near key symmetry at 1565 during the major cycle turn window late last month. With another major turn window fast approaching during the latter half of July, how the index reacts at key resistance around 1640 will likely determine whether the index attempts to peak at that time or not. Traction over 1640 should prompt some sort of re-test of the May high, but also sets up a potentially broader top during the late July turn window. On the other hand, a failure over the next few days near 1640 sets up a potential higher low during the key late July time period. However, such a development would be perversely longer-term bullish for the index.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX