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Price & Time: What Next For the Euro?

By , Sr. Currency Strategist
22 August 2013 12:05 GMT

EUR/USD fails after breaching last quarter’s high while GBP/USD stalls at important Fibonacci resistance. Gold still in consolidation mode.

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

PT_eur_now_body_Picture_4.png, Price & Time: What Next For the Euro?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY is re-testing important Gann resistance in the 98.75 area after several days of consolidation
  • Our near-term trend bias remains positive in USD/JPY while over the 1x1 Gann angle line of the February low in the 97.00 area
  • A close over 98.75 will be important and should set the stage for a more important move towards 99.50 and beyond
  • Today and Tuesday are minor cycle turn windows
  • Weakness below 97.00 on a closing basis would turn us negative on the rate

USD/JPY Strategy: Like the long side while over 97.00

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*97.00

97.60

98.65

*98.75

99.20

Price & Time Analysis: GBP/USD

PT_eur_now_body_Picture_3.png, Price & Time: What Next For the Euro?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD traded to its highest level in 2-months on Wedensday before encountering resistance at the 100% projection of the mid-July advance near 1.5725
  • While over a Gann line convergence near 1.5500 our near-term trend bias will remain higher
  • The 1.5725 level is now a key upside pivot with strength above needed to instigate another important move higher in Cable
  • A cycle turn window is seen around the first half of next week
  • Weakness below Gann support in the 1.5500 area would undermine the postive tone in the rate and turn us negative on the Pound

GBP/USD Strategy: Like only small longs while over 1.5500.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

1.5420

*1.5500

1.5570

1.5700

*1.5725

Price & Time Analysis: GOLD

PT_eur_now_body_Picture_2.png, Price & Time: What Next For the Euro?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD remains in consolidation mode below the 6th square root progression of the year-to-date low in the 1384 area
  • While over the 4th square root progression of the year’s low at 1317 our near-term trend bias will remain higher
  • The 1384 level remains key on the upside with traction above needed to trigger another important move higher
  • A minor cycle turn window is seen early next week
  • Weakness below 1317 on a closing basis would undermine the positive structure and turn us negative on the metal

XAU/USD Strategy: Like the long side whilst over 1317.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1317

1348

1368

*1384

1400

Focus Chart of the Day: EUR/USD

PT_eur_now_body_Picture_1.png, Price & Time: What Next For the Euro?

EUR/USD traded to its highest level since mid-February on Tuesday. On this latest run higher the Euro finally managed to break the 2Q13 high of 1.3415 on an intraday basis and by a few pips on a daily closing basis. Such action is very difficult to interpret especially when you take into account the fact that intraday breaches of quarterly highs often lead to aggressive counter trend reactions. (Case in point: the price action over the past two days). With a medium-term cycle turn window due around the middle of next week we will need to see how the rate reacts during this period. Any renewed strength that fails around 1.3415/30 on a closing basis would be very negative while a close over this zone will put the single currency in a very positive position. Weakness below 1.3220 would warn that a top has already been seen.

--- 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.

Looking for a way to pinpoint sentiment extremes in the Euro in real time? Try the Speculative Sentiment Index.

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

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22 August 2013 12:05 GMT