Talking Points
- GBP/USD takes out key resistance
- USD/JPY nearing cycle turn
- USD/CHF fails at near-term Fibonacci retracement
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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 continues to meander around the 1st square root relationship of the year’s high at 104.40
- Our near-term trend bias is lower in the exchange rate while below 104.85
- Interim support is seen around 103.85, but weakness under the 2nd square root relationship of the year’s high at 103.35 is needed to set the stage for a more important and immediate decline
- A turn window is seen over the next few days
- Only a close over 104.85 would shift our near-term trend bias back to positive
USD/JPY Strategy: Like the short side while below 104.85
Price Time Analysis: USD/CHF
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF touched its highest level in two months on Tuesday before failing at the 78.6% retracement of the November/December range at .9155
- Our near-term trend bias in higher is USD/CHF while over .8985
- The .9155 level is now key resistance and traction over this level is required to signal the start of another leg higher in USD/CHF
- The is a strong chance the rate has turned early, the next turn window is around the middle of next week
- On a daily close below the 2nd square root relationship of the 2013 low at .8985 would turn us negative on the rate
USD/CHF Strategy: We like adding to long positions on the weakness expected over the next few days provided .8985 holds.
Focus Chart of the Day: GBP/USD
The price action in GBP/USD this morning has caught us a bit by surprise. Since peaking on January 2nd the rate had unfolded nicely to the downside (though it was never able to close below the 2nd square root relationship of the YTD high at 1.6345). We were looking for this decline to resume today, but the market obviously has had other ideas. Assuming that we don’t get any late day theatrics, this action argues that the Pound has found a low much earlier than expected and this casts serious doubt on the actual importance of the January 2nd high. We were thinking it was a multi-month high, but now we are not so sure. While it could still be some sort of re-test before heading lower, the odds are certainly shrinking. The 2013 closing high at 1.6570 is critical resistance and a daily close over this level would further undermine the cyclical significance of January 2nd. A move back under the 1st square root relationship of the year’s high at 1.6470 is needed to reinvigorate immediate downside prospects.
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— 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
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX