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Price & Time: Why Next Week is Cyclically Important for the Euro

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Talking Points

  • Important cyclical timing seen next week in the Euro
  • USD/JPY fails at key Fibonacci resistance
  • Gold churns above key support level

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Foreign Exchange Price Time at a Glance:

Price Time Analysis: USD/JPY

PT_DEC_23_body_Picture_3.png, Price amp; Time:  Why Next Week is Cyclically Important for the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY has come under modest pressure since failing last week at the 100% extension of the September/October decline at 104.55
  • Our near-term trend bias is positive on the rate while over 102.00
  • The 100% extension of the September/October decline at 104.55 remains an important near-term pivot and gateway to further upside
  • A cycle turn window is seen later this week
  • Only a daily close below the 2nd square root progression of the year’s high at 102.00 would turn us negative on USD/JPY

USD/JPY Strategy: Favor the long side while over 102.00.

Price Time Analysis: GOLD

PT_DEC_23_body_Picture_2.png, Price amp; Time:  Why Next Week is Cyclically Important for the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD closed at its lowest level in over three years last week before finding support at the 1×2 Gann angle line of the 2012 closing high
  • Our near-term trend bias is lower in Gold while below the 1×2 Gann angle line of the August high at 1249
  • The 1×2 Gann angle line of the 2012 high now at 1184 is key support with a close below needed to trigger another push lower in the metal
  • A medium-term cycle turn window is seen late next week
  • Traction over 1249 would turn us positive on Gold

XAU/USD Strategy: Favor the short side while under 1249.

Focus Chart of the Day: EUR/USD

PT_DEC_23_body_Picture_1.png, Price amp; Time:  Why Next Week is Cyclically Important for the Euro

Next week continues to be a focal point for us in EUR/USD from a timing perspective as several long-term cycles align there. Perhaps the most important is a 17.2 month count from the 2012 low in the Euro. 17.2 months is significant as it is made up of two 8.6 month “Pi cycle” lengths discovered by Princeton Economics’ Martin Armstrong. We have noticed over the years that trends have a strong tendency to terminate around this 17-month interval. The decline in the SP 500 during the Financial Crisis, for instance, lasted almost exactly 17 months. With the Euro having rallied pretty steadily since its low in July of 2012 it is at some risk here of peaking. Of course just because cycles align does not mean that a reversal is assured. Continued strength in the Euro past the 2nd week of January would undermine this potential negative cyclical influence.

To receive other reports from this author via e-mail, sign up toKristian’s e-mail distribution list via this link.

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

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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What’s inside:

  • EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
  • Resistance in vicinity of 11825/80 likely to keep a lid on further strength
  • Targeting the low to mid-11600s with more selling

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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

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Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

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