Tanalys

Price & Time: Moment of Truth For the Markets

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.

Foreign Exchange Price Time at a Glance:

USD/JPY:

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/JPY has rebounded over the past few sessions after finding support at an Andrew’s line connecting the February and April lows in the 97.10 area

While below a convergence of various Gann levels related to the year-to-date high and the February low in the 98.50 area our bias remain lower

-Under 97.10 now needed to signal a downside resumption towards 96.40 and below

-Time cycle analysis suggests the exchange rate is in a turn window over the next few days

-Traction over 98.50 will turn us positive on USD/JPY

Strategy: Lack of downside following the cyclical peaks warns that the rate is just in a consolidation. Over 98.50 will get us long.

GB/USD:

Charts Created using Marketscope – Prepared by Kristian Kerr

GBP/USD traded to it highest levels since mid-February on Wednesday before finding resistance near the 50% retracement of the year-to-date range in the 1.5585 area

-Our bias remains higher in Cable, but a clear move over 1.5585 is requred to setup a more important push higher

-Short-term time cycles are a bit muddled, but scope for at least a minor turn seen around the first half of next weel

-The 3×1 Gann angle line from the year-to-date high in the 1.5475 area is immeidate support

-However, only weakness under the 50% retracement of the late April advance in the 1.5405 area would turn us negative

Strategy: Consolidation under 1.5585 is healthy. A close over this level would be bullish.

USD/CHF:

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/CHF has rebounded over the past couple of days from 3rd square root progression of the year-to-date high in the .9275 area

While over the 2nd square root progression of the year-to-date low in the .9200 area our bias is higher in the rate

-The 2nd square root progression from the year-to-date high near .9370 is immediate resistance and strength above is required to signal that a more important move higher is underway

-Near-term time cycles favor a turn of some sort around the start of the week

-A close under .9200 will shift our bias to negative in the pair

Strategy: Like being long while the rate is over .9200

Focus Chart of the Day: Dow 30

Our cycle analysis suggests that this is an important week from a timing perspective. The action so far in the markets has been mixed with some instruments showing strong signs of reversing while others have plodded along with their maniacal trends. Students of Gann know that much attention is placed on the weekly chart and we may not know this importance (if any) of this week for another few more weeks to come. Lower lows on the weekly bars in the weeks ahead in stocks, the euro, etc. would confirm the significance of this week. However, until we get any such price action we see little reason to be positioned aggressively counter trend.

Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

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

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

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