Talking Points

• USD/JPY breaks 100.00
• Euro at critical cyclical juncture
• Gold moves under important Gann support level

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Foreign Exchange Price Time at a Glance:

Price Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD remains in consolidation mode above the 50% retracement of the July to October advance at 1.3295
• Our near-term trend bias is lower in the exchange rate while below 1.3545
• The 1.3360 area is interim support, but weakness under 1.3295 is really needed to signal a resumption of the broader decline
• Friday to Tuesday is a potentially important cycle turn window in the Euro (we are favoring some sort of low)
• Only a move over the 6th square root progression of the year’s low near 1.3545 would turn us positive on the rate

EUR/USD Strategy: Like the short side while below 1.3545, but this should be reduced ahead of the cycle turn window.

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Price Time Analysis: NZD/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• NZD/USD traded to its lowest level since mid-September earlier this week before rebounding from just below the .8185 4th square root progression of the October high
• Our near-term trend bias is lower in the Kiwi while below the 2nd square root progression of last month’s high at .8360
• Traction under .8185 is needed to spark another more important leg lower in the rate
• Today and Friday is a medium-term cycle turn window
• A move through .8360 would turn us positive on the Bird

NZD/USD Strategy: Like being square into the turn window.

Price Time Analysis: XAU/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• XAU/USD closed under the 1×1 Gann line of the year’s closing low at 1277 on Tuesday
• Our near-term trend bias is now lower in the metal
• Focus is now on Gann support between 1248 and 1243 with a move below needed confirm the start of a more important move lower
• The middle of next week is a medium-term cycle turn window
• Back over 1322 would shift our near-term trend bias back to positive

XAU/USD Strategy: Stopped out on the close under 1277. Square for now.

Focus Chart of the Day: USD/JPY

A few weeks ago we wrote about the chart above. It is depicts a simple 61.8% “time retracement” of the advance from the 3Q2012 low to this year’s high. Our main premise was that USD/JPY was becoming vulnerable to a break from the contracting range/triangle that had dictated trading over the prior few months. We believed this because our close observation of markets over the years has shown that long consolidations often terminate around important Fibonacci time relationships. Interestingly since this cyclical “turn window” late last month the exchange rate has marched steadily higher to overcome the upper trend line of the formation over the past few days. An important directional move seems to be developing. We are now focused on Gann resistance at 100.05 and 100.65. A move over the latter looking to be the final piece of the puzzle (with traction above likely setting off a much more impulsive move). Only weakness under 97.60 brings a false pattern break scenario back into play.

— 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