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 moved steadily higher over the past few days since finding support near the 38% retracement of the early April advancenear 97.10
–Strength back over the 1st square root progression of the year-to-date high in the 98.50 area has turned us positive on the exchange rate
-Focus back on the 50% retracement of 2007 to 2011 decline in the 99.80 area with a close above this level required to spark a more significant advance
-Time cycle analysis indicates that a minor turn window is in effect over the next couple of days
-The 98.50 area is now immediate support, but only weakness below the 97.10 level turns us negative on USD/JPY
Strategy: Favor longs while over 97.10, but want to see 98.80 give way before adding.
GOLD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–XAU/USD continues to consolidate around the 4th square root progression of the the year-to-date low in the 1470 area
-Our bias is lower in the metal while under the key Gann/Fibonacci confluence zone in the 1494 to 1510 area
-The 3rd square root progression of the year-to-date low near 1430 is key support and weakness below this level is needed to signal the start of a downside resumption
-Near-term focused time cycles argue a turn could be seen on Wednesday or Thursday
-A close over 1510 is required to undermine the broader negative technical tone and turn us positive on the metal
Strategy: Like being short Gold against 1510.
AUD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–AUD/USD failed last week at the 2nd square root progression of the year-to-date high in the 1.0380 area and has come under steady downside pressure over the past few days
–Our bias remains lower in the rate, but a close under the 88.6% retracement of the March to April advance in the 1.0165 area is needed to maintain the immediate downside tack and expose 1.0115 and below
-Time cycle analysis suggests scope for a turn over the next couple of days
-The 78.6% retracement of the March to April move higher is now immediate resistance
-However, only strength over the 3rd square root progression of the year-to-date high at 1.0280 will turn us positive on the exchange rate
Strategy: We have been advocating a sell on strength strategy, but with cycle turning here we like taking some off the table here.
Focus Chart of the Day: EUR/USD
Gann often wrote about the concept of the ‘squaring of price time’ which is really just a way of saying that price levels will influence the duration of time of cycles and vice versa. The second half of this week will be 13.7 weeks from the year-to-date high recorded in the EUR/USD on February 1st at 1.3710. Moving the decimal right one place suggests a potential cycle relationship exists here. We will be closely monitoring the rate for signs of a turn over the next few days. The 1.3200/45 area remains a critical resistance area.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
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