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:
EUR/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–EUR/USD has recovered over the past few days since finding support at the 1×1 Gann angle line of the year-to-date high
–A convergence of the 50% retracement of the year-to-date range and the 4th square root progression of the year’s high in the 1.3225/45 area is key resistance and while below this zone our bias is lower in the rate
-Support is seen at the 3rd square root progression of the year-to-date low near 1.3085, but a confluence of several Gann levels near 1.3015 looks critical with weakness below needed to setup an important decline
-A Gann cycle turn window related to the February high remains in effect for another couple of days
-Only a close over 1.3245 would turn us positive on the Euro
Strategy: Risk still remains that a broader top is building. Like the short side while under 1.3225/45
NZD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–NZD/USD traded down to its lowest levels since early April on Wednesday before rebounding sharply over the past few sessions
-Our bias is lower, but traction below the 61.8% retracement of the March to April advance in the .8355 area is required to confirm the integrity of the latest decline and setup a more important move lower
-A minor cycle turn window is seen over the next couple of days
-The 38% retracement of the April to May decline in the .8480 area is immediate resistance
-However, only strength over the 4th square root progression of the year-to-date low near .8530 turns the technical outlook more positive
Strategy: Favor short positions whilst below .8530
EUR/CHF:
Charts Created using Marketscope – Prepared by Kristian Kerr
–EUR/CHF has moved steadily higher over the past few days since finding support just under the 3×1 Gann angle line from the year-to-date closing high
–Our bias is positive on the cross, but strength over the 1.2345 2nd square root progression of the year-to-date high is needed to signal the onset of a more significant move higher
-Short-term focused time cycles suggest the next couple of days could see a turn of some sort
-The 4×1 Gann angle line from the year’s closing high in the 1.2270 area is immediate support
-Weakness below the 3rd square root progression of the year’s closing high at 1.2230 would turn us negative on the cross
Strategy: Prefer the long side while over 1.2230.
Focus Chart of the Day: USD/CAD
USD/CAD is challenging an important support zone today. The 1.0035 to 1.0015 area is a convergence of several key levels including the 3rd square root progression of the year-to-date-high, the 61.8% retracement of the year-to-date range and the 2×1 Gann angle line drawn from the year’s low. A successful test of this zone should prompt a decent counter-trend move. Given yesterday’s NY close was within the zone we will define a successful test as close back above 1.0035 in the next couple of days. On the flip side, a close under 1.0015 will undermine the support zone and open the way for another leg lower.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.
Need guidance managing risk on trades? Download the free Risk Management Indicator.