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Price & Time: GBP/USD Enters the "Death Zone"

By , Sr. Currency Strategist
12 September 2013 12:15 GMT
  • GBP/USD at an important cyclical pivot
  • EUR/USD encounters stiff Gann resistance
  • Kiwi nearing an important upside pivot

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_sterling_body_Picture_4.png, Price & Time: GBP/USD Enters the "Death Zone"

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD tested a convergence of Gann angle lines in the 1.3320 area on Wednesday
  • While below this resistance zone on a closing basis our near-term trend bias will remain lower in the single currency
  • The 50% retracement of the year’s range at 1.3225 needs to be broken to re-instill downside momentum, but under 1.3100 really required to confirm a broader downside resumption
  • A medium-term cycle turn window is in effect for a couple of days
  • Strength over 1.3320 on a closing basis will turn us positive on the Euro

EUR/USD Strategy: Like the short side while under 1.3320.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3100

1.3225

1.3295

*1.3320

1.3365

Price & Time Analysis: USD/CHF

PT_sterling_body_Picture_3.png, Price & Time: GBP/USD Enters the "Death Zone"

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CHF failed last week at the 1x1 Gann angle line of the year-to-date high in the .9455 area
  • While over the 61.8% retracement of the late August to September advance at .9265 our near-term trend bias will remain higher in the exchange rate
  • The 5th square root progression of the year’s high at .9340 is immediate resistance, but a move through .9430 is really required to signal a broader upside resumption
  • A minor cycle turn window is seen over the next couple of days
  • A move under .9265 on a closing basis will undermine the positive technical structure in the rate and turn us negative

USD/CHF Strategy: Like the long side while over .9265

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CHF

*0.9265

0.9285

0.9305

0.9340

*0.9430

Price & Time Analysis: NZD/USD

PT_sterling_body_Picture_2.png, Price & Time: GBP/USD Enters the "Death Zone"

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD overcame the 88.6% retracement of the August range and traded to its highest level in three weeks on Thursday
  • While over the 50% retracement of the August range near .7945 our near-term trend bias will remain higher in the Kiwi
  • The 50% retracment of the year’s range at .8175 is a critical upside pivot with traction above required to set up a more important move higher in the Bird
  • Minor cycle turn windows are seen today and around the middle of next week
  • Interim support is seen around .8035, but only weakness below .7945 will shift our outlook to negative in the rate

NZD/USD Strategy: Like the long side while over .7945.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

*0.7945

0.8035

0.8135

0.8155

*0.8175

Focus Chart of the Day: GBP/USD

PT_sterling_body_Picture_1.png, Price & Time: GBP/USD Enters the "Death Zone"

GBP/USD overcame the 61.8% retracement of the year-to-date range on Wednesday to trade to its highest level since early February. The coincident break of the 2Q13 high now puts Cable in a much more positive position in a longer-term sense. Some caution is required here in the short-term, however, as the rate is now 47 days off the year-to-date low. A persistent relatively undisturbed trend of 45-50 trading days can lead to reversals and is often referred to in Gann analysis as the “death zone”. Key resistance levels we will be monitoring for signs of a reversal include the 4th square root progression of the year’s high at 1.5835 and the 2x1 Gann angle line of the year’s high near 1.5900. Severely hindering the potential for a reversal here is the fact that coincident indicators like sentiment and rate-of-change are not anywhere near extremes and in fact very close to neutral.

--- 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 GBP 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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12 September 2013 12:15 GMT