Talking Points

• USD/JPY lurking near important resistance
• GBP/USD encounters resistance at the “hidden fibo”
• Gold bottoms early

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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 found support on Wednesday just ahead of the 1×1 Gann angle line drawn from the February low
• Subsequent strength back through the 50% retracement of the May to June decline in the 98.75 area has shifted the near-term trend bias back to positive
• Some Gann resistance is seen at 99.65, but the main upside attraction is the 3rd square root progression of the year’s high at 100.65 with traction above needed to provoke a more important move higher
• Some minor cycle turn windows are seen next week
• Only weakness below 97.60 on a closing basis would turn the technical outlook negative

USD/JPY Strategy: Like buying on weakness against 97.60.

Price Time Analysis: USD/CHF

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/CHF broke below the 88.6% retracement of the year-to-date range on Thursday to trade to its lowest level in over seven months
• Our near-term trend bias remains lower in the exchange rate while below .9195
• Some minor support is seen around .9075, but the main downside side attraction for us is the .9045 8th square root progression of the year’s low
• A medium-term cycle turn window is seen in about a week’s time
• The .9140 area is near-term resistance, but only a close back over .9195 would warn that a more important move higher is developing

USD/CHF Strategy: Like the short side while below .9195.

Price Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• GBP/USD traded to its highest level in over 8-months on Wednesday before encountering resistance at the 88.6% retracement of the year-to-date range
• While above a convergence of the 2×1 Gann line of the year’s high and the 1×4 line of the year’s low near 1.5875 our near-term trend bias will remain higher in Cable
• The 88.6% retracement at 1.6165 is near a clear-near-term pivot with strength above needed to set up an advance towards upside attractions at 1.6215 and 1.6260
• The middle of next week is a clear cycle turn window for the exchange rate
• Aggressive weakness below Gann support at 1.5875 would undermine the immediate positive tone in Sterling and turn us negative

GBP/USD Strategy: Like the long side while over 1.5875.

Focus Chart of the Day: GOLD

XAU/USD reversed nicely off the 1×2 Gann angle line of the year-to-date low near 1293 on Wednesday. Subsequent strength through important Gann and Fibonacci resistance at 1350 suggests a resumption of the uptrend in place since late June. From a cyclical perspective out idealized time for a turn in the metal was actually today. Assuming that we don’t get a cyclical inversion here we think it is probably safe to say that the turn we were looking for just came a couple of days early (an occurrence that can happen frequently stronger uptrends). Strength beyond Monday over 1375 would completely alleviate any concerns of an inversion and setup a more important push higher. Unexpected weakness below 1293 would turn the technical outlook very negative.

— 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