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Price & Time: USD/JPY Fails Again

By , Sr. Currency Strategist
13 January 2014 13:00 GMT

Talking Points

  • USD/JPY reverses from key long-term resistance
  • EUR/USD rebounds from key Gann level
  • AUD/USD testing important resistance

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_JAN_13_body_Picture_3.png, Price & Time: USD/JPY Fails Again

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD traded to its lowest level in over a month late last week before finding support just ahead of the 1.3540 3rd square root relationship of the 2013 high
  • Our near-term trend bias remains lower in the Euro while below the 2013 closing high at 1.3800
  • The 50% retracement of the November to December advance at 1.3590 is interim support, but only weakness under 1.3540 confirms the start of another leg lower in the rate
  • The middle of the week is a minor cycle turn window
  • Only over 1.3800 shifts our near-term trend bias back to positive

EUR/USD Strategy: Favor the short side while below 1.3800

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3540

1.3590

1.3665

1.3720

*1.3800

Price & Time Analysis: AUD/USD

PT_JAN_13_body_Picture_2.png, Price & Time: USD/JPY Fails Again

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD tested the 9th square root realtionship of the 4Q13 high at .8860 again last week before reversing sharply higher
  • Our near-term trend bias is higher while above .8860
  • A variety of Fibonacci and Gann price relationships converge between .9040 and .9060 and strength over the latter is needed to expose the next key zone of resistance at .9160
  • A medium-term cycle turn window is seen on Tuesday and Wednesday
  • Interim support is seen at .8960, but only weakness under .8860 on a daily closing basis will turn us negative on the Aussie

AUD/USD Strategy: Like the long side while over .8860.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

.8960

.9000

0.9050

*0.9060

.9100

Focus Chart of the Day: USD/JPY

PT_JAN_13_body_Picture_1.png, Price & Time: USD/JPY Fails Again

The reversal in USD/JPY we have been writing about over the past couple of weeks has finally begun to take shape following Friday’s second failure at critical long-term retracement resistance near 105.35/55. Initial weakness on Friday stalled again at a Gann angle line related to the 2011 low with the exchange rate closing right on this level to end the week. The new week, however, has seen this support level easily give way leading to a fairly quick drop to test the second square root relationship of the year-to-date high around 103.35. This level is an important near-term pivot with clear weakness below (daily close) needed to signal that a more ominous decline is unfolding. Interim resistance is now seen at 104.40 and 104.85. Time cycle analysis suggests the second half of next week is the next turn window of importance.

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--- 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

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13 January 2014 13:00 GMT