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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Foreign Exchange Price Time at a Glance:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY reversed last week during a key cycle turn window off the 50% retracement of the June to July advance in the 97.60 area
- Advance has so far been halted by the 61.8% retracement of the May to June decline near 100.00, but while over last week’s cyclical low our near-term trend bias will remain higher in the rate
- The 100.00 level is now a key upside pivot with strength above this level now needed to signal the start of a more important push higher
- Near-term cycle studies suggest Wednesday is a minor turn window
- A close below 97.60 would undermine the positive cyclical picture and turn us negative on the exchange rate
Strategy: Like longs while over 97.60.
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF found support just below the .9245 6th square root progression of the year-to-date high during last week’s cycle turn window
- Subsequent strength through the 1×2 Gann angle line has turned the near-term trend bias higher in USD/CHF
- Advance has so far has been unimpressive and traction over the 61.8% retracement of June to July advance near .9365 is needed to trigger a more important run higher
- Short cycles still look positive for another couple of days
- Weakness below .9245 on a closing basis would undermine the burgeoning positive structure and turn us positive on the exchange rate
Strategy: Like the long side while over .9245.
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has moved steadily higher since bottoming ahead of the 78.6% retracement of the June to July advance in the 1.0240 area during last week’s cycle turn window
- Strength through 1.0315 has shifted our near-term trend bias to higher in Funds
- The 2nd square root progression of the year’s high at 1.0405 is a clear upside pivot with strength through here required to trigger the next leg higher in the rate
- Near-term focused time cycles suggest Wednesday is the next minor turn window
- The 3rd square root progression of the year’s high near 1.0300 is immediate support, but only under 1.0240 alters the positive technical outlook and turns us negative on the rate
Strategy: Like the long side in Funds while over 1.0240.
Focus Chart of the Day: GOLD
XAU/USD has come under steady downside pressure since failing at key symmetry in the 1348 area during last month’s important cycle turn window. The 2nd square root progression of last month’s high near 1280 has so far halted the decline and the how the metal reacts around this pivot over the next few days will likely determine whether a more important decline is in the offing. With the cyclical picture seemingly still negative for another couple of weeks a downside break is favored. At a minimum such a break should expose 1250/60. On the upside a move back through the 1st square root progression of the July high near 1317 would alleviate some of the downside pressure, but only over 1348 on a closing basis truly alters the negative technical structure and turns us positive on Gold.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in the Gold in real time? Try the Speculative Sentiment Index.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX