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Price & Time: An Important Next Few Days for the Markets

By , Sr. Currency Strategist
28 August 2013 12:00 GMT

A moment of truth here for the stock market. GBP/USD and NZD/USD break below key support levels while USD/CHF remains in consolidation mode.

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: GBP/USD

PT_SPX_body_Picture_4.png, Price & Time: An Important Next Few Days for the Markets

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has come under steady downside pressure since failing last week near the 100% projection of the July advance in the 1.5725 area
  • Subsequent weakness through a key Gann convergence near 1.5500 has shifted our near-term trend bias to negative
  • Gann levels at 1.5460 and 1.5415 should be watched closely as a close below these levels will be further confirmation that a more important decline is underway
  • The cyclical picture is not the clearest at the moment in the Pound, but a minor turn window is seen around the latter part of the week
  • The 50% retracement of the year’s range at 1.5580 needs to be re-taken to alleviate some of the immediate downside pressure

GBP/USD Strategy: We exited our remaining long position on the move under 1.5500.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.5415

1.5460

1.5470

1.5500

*1.5580

Price & Time Analysis: USD/CHF

PT_SPX_body_Picture_3.png, Price & Time: An Important Next Few Days for the Markets

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CHF has been in consolidation mode since finding support last week at the7th square root progression of the year’s high near .9150
  • While below the 3rd square root progression of the year’s low at .9310 our near-term trend bias has to remain negative in the exchange rate
  • The .9150 is a clear downside pivot with a close below needed to set up a renewed leg lower
  • Cycle studies point to the latter half of the week as a likely turn window
  • Any traction over Gann resistance at .9310 would turn the outlook positive

USD/CHF Strategy: Small short positions favored whilst below .9310.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CHF

0.9115

*0.9145

0.9200

0.9245

*0.9310

Price & Time Analysis: NZD/USD

PT_SPX_body_Picture_2.png, Price & Time: An Important Next Few Days for the Markets

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has come under steady downside pressure since failing at the 2x1 Gann angle line of the year’s closing high near .8160 a couple of weeks ago
  • Subsequent weakness below .7860 has turned our near-term trend bias to negative in the Bird
  • Gann support around .7750 is a near-term pivot, but weakness below .7680 is really required to set off a more significant decline
  • A minor cycle turn window is seen late this week/early next week
  • The .7950 area is resistance and strength through here is required to shift the technical outlook to positive

NZD/USD Strategy: Stopped out of latest long attempt on the move below .7860. Square here for a bit.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

*0.7680

*0.7750

0.7755

0.7870

*0.7950

Focus Chart of the Day: S&P 500

PT_SPX_body_Picture_1.png, Price & Time: An Important Next Few Days for the Markets

We will be watching the S&P 500 very closely today. Our cycle work suggests that the next day or so is a likely time for a minor reversal attempt. With the index near crucial Gann support at 1627, it marks a natural key inflection point. In many ways the more important price action to watch will be in the days ahead, however, as this will be the first real indication as to whether the “personality” of the index has changed following the important peak recorded at the beginning of the month. An aggressive advance from near current levels would suggest that the broader uptrend remains firmly in place and that the past couple of weeks were just a correction within the primary trend. A tepid recovery or failure to react at all to the current cycle turn window, on the other hand, will suggest that the personality of the equity market has begun to change and that a more important correction is underway. A close under 1627 would be further evidence of this.

--- 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 SPX 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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28 August 2013 12:00 GMT