Talking Points

• Aussie entering cycle turn window
• USD/JPY meandering between key levels
• Cable turned away by key Gann angle line

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Focus Chart of the Day: AUD/USD

The next couple of days look like a potentially important cycle turn window in AUD/USD. With the exchange rate entering into this window in a well-defined uptrend, the risk in our view is that it leads to a top of some kind. Price wise the area between 96.70 and 97.15 looks extremely important as it marks a confluence of several key Gann and Fibonacci levels including the 161.8% extension of the late September decline, the 61.8% projection of the early September advance, the 9th square root progression of the year’s low and the 50% retracement of the year-to-date range. Any failure in or around this resistance zone over the next couple of days should set up a decent counter-trend decline. Strength over 97.15 especially on a daily closing basis would likely negate the topping potential.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/JPY continues to meander around the middle of a multi-month contracting range
• Our near-term trend remains positive on the exchange rate while above the 7th square root progression of the year’s high at 96.60
• The 5th square root progression of the year’s high at 98.60 is immediate resistance, but traction over 99.65 is really needed to provoke a more meaningful trend move higher
• Tomorrow and late this week are minor cycle turn windows
• A daily close under 96.60 would turn us negative on the exchange rate

USD/JPY Strategy: Square until we get more clarity.

Price Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• GBP/USD encountered strong resistance late last week at the 8×1 Gann angle line of the year’s high in the 1.6215 area
• Our near-term trend bias remains positive on Cable while over the 2nd square root progression of the month-to-date high at 1.6000
• The 1.6215 area remains a natural upside attraction with strength above needed to trigger the next meaningful push higher
• A minor cycle turn window is seen mid-week, but a more important window is eyed early next week
• Only weakness below 1.6000 would shift the near-term trend bias lower

GBP/USD Strategy: Square here, but looking buy weakness into next week’s turn window.

Price Time Analysis: USD/CAD

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/CAD has come under steady downside pressure since reversing near the 61.8% retracement of the August to September decline during the early October cycle turn window
• Our near-term trend bias is lower and will remain so while below the 50% retracement of the August to September range at 1.0375
• The 61.8% retracement of the September to October advance at 1.0270 is a near-term pivot with traction below needed to expose attractions at 1.0210
• Some minor turn windows are seen mid-week and early next week
• A daily close over 1.0375 would turn us positive on Funds

USD/CAD Strategy: Like the short side while under 1.0375.

— 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

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To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX