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 broke lower from is multi-day consolidation to trade at its lowest level in over a month on Tuesday
– Support has been found from just below the 92.80 4th square root progression of the year-to-date high, but while below the 94.15 38% retracement of the March-February decline our bias is lower
-The 92.80 level is now a key near-term pivot with weakness under this level needed to setup another leg lower
-Near-term focused cyclical studies indicate a turn window is in effect over the next couple of days, but late this week is bigger picture Pi cycle relationship related to the 2011 low which could overshadow
– A clear break over 94.15 will turn us positive on the exchange rate
Strategy: A lot has happened since our last update. Sold the break of 93.50. Roundtrip from 92.55 saw us eke out a small gain on half and scratch on the rest. Looking to get long over the next few days if 94.15 gets taken out.
USD/CAD:
Charts Created using Marketscope – Prepared by Kristian Kerr
– USD/CAD broke lower on Tuesday after several days of consolidation above a key Gann/Fibonacci confluence in the 1.0120/40 area
– We remain cautiously negative on Funds as a clear break of 1.0120 is needed to confirm the integrity of the most recent decline and open the way for a more important leg lower towards 1.0090 and beyond
-A medium-term turn window remains in effect for another day or so and a change in trend remains possible during this time
– The 50% retracement of the 2011 range in the 1.0145 area is immediate resistance
-However, strength over a convergence of several minor and major retracements between 1.0170/85is needed to shift our bias higher
Strategy: Took profit on our remaining short position from 1.0235 when 1.0140 was given. We are wary of change in trend over the next day or so. Will look to get long if Funds can rebound from this support zone.
AUD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
– AUD/USD has recovered over the past couple of days after finding support near the 1.0390 convergence of the 1×1 Gann angle from year-to-date closing low and the 1st square root progression from the last month’s high
– Our bias is still higher in the Aussie, but strength ideally on a closing basis over the 78.6% retracement of the year-to date range in the 1.0495 area is needed to signal the start of a more important push higher
– A minor Fibonacci related time cycle turn window is in effect over the next few days and a change in trend is possible during this time
– The 3rd square root progression from the year-to-date low in the 1.0420 area is immediate support
– Weakness under 1.0390, however, is really required to undermine the positive technical tone and turn us negative on the pair
Strategy: We are flat at the moment. Want to see how Aussie reacts during the turn window over the next couple of days before commencing our next operation.
Focus Chart of the Day: AUD/USD
An interesting time/price harmonic is shaping up in AUD/USD over the next couple of days. A simple Fibonacci time retracement between Wed/Thurs and the year-to-date high reveals symmetry with last quarter’s low and the February 12th low (ie. other turns in the market). According to the methodology, this relationship increases the chances for a change in trend (or at a minimum an attempt) over the next few days. A similar relationship existed before last month’s 20 big figure counter-trend move higher in Euro/Stokkie. The 78.6% retracement of the year-to-date range near 1.0495 is key resistance, but below 1.0390 needed to signal that a more important change in trend is really underway. We like to give these types of turn windows a day or so of leeway on either side. Aggressive strength over 1.0495 will negate the potential for a turn.
— 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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