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 continues to trade in a narrow sideways to higher range below a multitude of key Gann Fibonacci levels between 1.2870 and 1.2930
– While under this resistance zone our bias has to remain lower in the exchange rate
-Focus is still on a Fibonacci confluence near 1.2720 and the 61.8% retracement of the advance from the 2011 low just below at 1.2675
– Time cycle analysis suggests the latter half of this week is a turn window of some importance before a much bigger picture cycle inflection point seen around the second half of the month (See Focus Chart of the Day)
– Traction over 1.2930 needed to turn us positive on the single currency
Strategy: The lack of volatility is not surprising with much of Europe still on holiday. Still looking to sell the euro at 1.2895 with a stop just over 1.2940. If trade goes our way we will be looking to take off half ahead of 1.2720.
USD/CHF:
Charts Created using Marketscope – Prepared by Kristian Kerr
– USD/CHF has come under pressure over the past few days after failing to surpass the year-to-date high, though we should note a new closing high for the year was recorded
– The 1×1 Gann angle line from the year-to-date low converges with the 1×1 from the year-to-date high around .9435 for the next day or so and while over this level our bias is higher in the exchange rate
-Strength over the 8×1 Gann line from the year’s high in the .9550 area needed setup a further extension, however
– A medium-term Gann cycle turn window is seen around the end of the week, but shorter-term focused cycles turn positive around the middle of this week
– A decline under .9435 needed to turn us negative on USD/CHF
Strategy: Trend is higher in USD/CHF and with the cycles suggesting one more push in the pair we want to try buying on weakness over the next day or two. Looking to buy USD/CHF at .9440 with a stop just under .9400.
NZD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
– NZD/USD has come under modest pressure over the past few days after last week’s failure from just below the 61.8% retracement of the year-to-date range
– We are still positive on the Bird, but strength over .8400 is really needed to signal the start of another important push higher
– Near-term focused time cycle analysis are turning positive for a few days late on Tuesday, but a medium-term turn window seen around the end of the week/early next week
– A convergence of Gann levels related to the year-to-date range in the .8340 is now key support
– The 1×1 Gann angle line from the year-to-date low converges with a multitude of retracements around .8285/.8300 and only weakness below there undermines the positive technical structure
Strategy: We are at a tricky point from a time cycle point of view, but it looks like it is turning positive for a few days. Want to get long over the next day or so at .8345 with a very tight stop just under .8330. If this gets triggered we will be looking to buy again around .8305 with a stop just under .8275.
Focus Chart of the Day: EUR/USD
Some of the cyclical methodologies that we incorporate into our analysis suggest that the latter part of this week and the start of next week could see a turn materialize in EUR/USD (coincidentally at the same day as US non-farm payrolls data). This cyclical turn window, however, is likely only a minor pre-cursor to a much bigger time cycle turn window slated for the second half of the month. This time frame looks significant because several long-term cyclical methodologies all point to the same period. Like in price, when a few unrelated methodologies converge on a particular time period it serves to further validate its potential importance. Because of its broader scope and potential significance, this turn window is bigger than most as it encompasses about 3 weeks. It starts around the 15th and goes through May 10th. Our focus period within this multi-week window is concentrated around the second half of the week of April 22nd as this will be a 61.8% retracement in time of the move from the all-time low recorded in the Fall of 2000 and the all-time high seen in July of 2008. We will go more into detail on the different cycles and their significance as we approach them.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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.
To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.