Talking Points
- Opportunities in EUR/CHF over the next few days
- USD/JPY overcomes important Gann level
- USD/CAD approaching key support zone
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY closed over the 3rd square root relationship of the year’s low at 103.75 yesterday
- Our near-term trend bias remains higher in the exchange rate while over 102.75
- The 78.6% retracement of the year’s range at 104.45 is the next main line of resistance
- The middle of next week is a potential cycle turn window
- Only weakness back under 102.75 would turn us negative on the exchange rate
USD/JPY Strategy: We like the long side while over 102.75
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has come under pressure following last month’s failure from just above the 50% retracement of the 2009/2011 decline
- Our near-term trend bias is lower in Funds while below 1.1120
- A daily close under 1.1010 is needed to prompt a downside resumption, but weakness under 1.0910 is really required to signal the start of a more important decline
- A cycle turn window is seen later next week
- A move back through 1.1120 would turn us positive on the exchange rate
USD/CAD Strategy: Square, but aggressive traders could look to sell into strength against 1.1120.
Focus Chart of the Day: EUR/CHF
We don’t spend too much time looking at EUR/CHF these days. Prior to the SNB’s decision to implement a floor at 1.2000 more than two and a half years ago it was a great barometer of European and global risk appetites and just a good instrument to trade. Now not so much, which was no doubt by design of the SNB. We don’t think it is a coincidence that Gold in USD terms also peaked on the very day the floor was announced. There was clearly a concerted global effort to eliminate the allure of traditional safe havens. So far the gambit has worked, but we have little doubt that the SNB’s attempt to alter the primary trend will one day fail spectacularly. The real question is when? At the moment the market’s faith in policy makers and their “powers” is high. This will change and when it does 1.2000 will give way. This is probably a ways off given current social mood, but at the risk of sounding like Yogi Berra, probably not as far out as some might think. Opportunities do still arise from time to time in the cross (the next few days is one of them), but admittedly the artificial suppression of volatility makes it a very difficult exchange rate to analyze from a cyclical perspective. That said, a few cyclical relationships will be converging over the next few days. With the cross trading higher since early March we are looking for some kind of high into this turn window.
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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