Talking Points
- Important cycle turn window later this week in the Euro
- USD/JPY threatening a range break
- Gold nearing critical price level
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Focus Chart of the Day: EUR/USD
The coming Friday and the first couple of days next week have been circled in our calendar for several months now. They mark a potentially significant cyclical turn window for EUR/USD as several key Fibonacci and Pi time relationships related to the 2008, 2010 and 2012 lows all converge during this timeframe. Some sort of tradable reversal should materialize from it. The real question is in which direction? Given the rather persistent downtrend of the past couple of weeks (and the fact the time relationships stem from important prior lows) we favor a low developing. However, four trading days is plenty of time for a formidable counter-trend recovery to develop and we can’t rule out just yet the potential for some sort of secondary peak. For the moment we prefer to observe and once the directional outlook becomes a bit more clear we will update and identify levels from which to look for a change in trend.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY traded higher late last week to test the upper boundary of the multi-month contracting range in the exchange rate
- Our near-term trend bias is higher in USD/JPY while above 97.60
- A daily close over the 61.8% retracement of the September to October decline at 99.05 is needed to confirm that a more important move higher is underway
- Late next week is the next important cycle turn window for USD/JPY
- Aggressive weakness below the 6th square root progression of the year’s high at 97.60 would turn us negative
USD/JPY Strategy: Like the long side while above 97.60.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD remains in a broad consolidation below the 8×1 Gann angle line of the year’s high
- Our near-term trend bias is lower in Cable while below the 61.8% retracement of the late October/early November decline at 1.6120
- The 9th square root progression of the year’s low near 1.5900 remains a critical downside pivot with traction below needed to signal the start of a more important move lower
- The latter half of the week is a medium-term cycle turn window
- A move back through 1.6120 would shift our near-term trend bias back to positive in Cable
GBP/USD Strategy: Like holding only reduced short positions while below 1.6120.
Price Time Analysis GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD has come under steady pressure over the past few days to trade to its lowest level since the middle of last month
- The 1×1 Gann angle line of the year’s closing low near 1275 is critical support and while over this level our near-term trend bias will remain higher
- Interim resistance is seen near 1320, but traction over 1360 is really needed to suggest that any sort of meaningful move higher is underway
- A minor cycle turn window is seen around the middle of the week
- A daily close below 1275 will turn us negative on the metal
XAU/USD Strategy: Like the long side against 1275.
— 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