Talking Points
- USD/JPY stalls near key resistance
- USD/CHF testing important support
- SP 500 test key Fibonacci level
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 3rdsquare root relationship of the year-to-date high on Tuesday
- Our near-term trend bias is now higher in the exchange rate
- The 2nd square root relationship of the year’s low at 102.75 is critical resistance that needs to be overcome soon to signal that a more important move higher is taking hold
- A cycle turn window is seen around the middle of next week
- A daily close below the 4th square root relationship of the year’s high at 101.35 would turn us negative again on USD/JPY
USD/JPY Strategy: Like being square for the time being, but may look to buy a break of 102.75.
Price Time Analysis: USD/CHF
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF tested the .8935 61.8% retracement of the December to January range again today
- Our near-term trend bias is higher while over .8935
- The 3rd square root relationship of the year’s low at .9080 is key resistance and needs to be breached to signal a resumption of the uptrend
- A cycle turn window is seen Friday/Monday
- A daily close below .8935 would turn us negative on the rate
USD/CHF Strategy: May look to buy next week.
Focus Chart of the Day: SP 500
The SP 500 has rallied aggressively since reversing during last week’s cycle turn window. A move through 1850 would confirm the significance of last week’s low and set up a further push higher into the next turn date of importance in March and possibly even into 3Q14. Yesterday the index encountered good resistance near the 78.6% retracement of the year-to-date range at 1827. A retracement of the 80+ handle move over the last week seems natural. Such a decline could extend all the way to Gann support at 1780 without inflicting any real sort of technical damage. A move below 1780 on a daily close basis would begin to cloud the positive technical outlook, but only aggressive weakness below 1738 would completely undermine the positive technical structure. Such an occurrence would signal a major shift in the index’s behavior and set up a more important distribution phase. This is not our favored scenario – just yet.
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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