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Price & Time: The Next Couple of Trading Days Are Critical For USD/JPY

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

Talking Points

  • USD/JPY enters into important cycle turn window
  • EUR/USD broad decline under threat
  • USD/CAD nearing important support

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_JAN_24_body_Picture_3.png, Price & Time: The Next Couple of Trading Days Are Critical For USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD reversed sharply from the 3rd square root relationship of the 2013 high on Thursday to trade at its highest level in three weeks
  • Our near-term trend bias is lower in the Euro while below the 2013 closing high near 1.3800
  • A close back under the 2nd square root relationship of the 2013 high at 1.3655 is needed re-instill downside momentum
  • A turn window is seen around the middle of next week
  • A close over 1.3800 would shift our near-term trend bias to positive

EUR/USD Strategy: Like the short side while 1.3800 holds.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3595

*1.3655

1.3715

*1.3800

1.3825

Price & Time Analysis: USD/CAD

PT_JAN_24_body_Picture_2.png, Price & Time: The Next Couple of Trading Days Are Critical For USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD touched its highest level since July of 2009 on Thursday before reversing sharply
  • Our near-term trend bias remains higher in USD/CAD while above 1.0960
  • The year-to-date high near 1.1170 is now a clear near-term upside pivot with strength above needed to prompt the next leg higher in Funds towards a Fibonacci attraction at 1.1235
  • The next important cycle turn window in USD/CAD is seen around the middle of February
  • On a daily close below the 2nd square root realtionship of the year’s high at 1.0960 would turn us negative on the exchange rate

USD/CAD Strategy: We like the long side while over 1.0960.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.0960

1.1055

1.1070

1.1135

*1.1170

Focus Chart of the Day: USD/JPY

PT_JAN_24_body_Picture_1.png, Price & Time: The Next Couple of Trading Days Are Critical For USD/JPY

The next couple of trading days are critical for USD/JPY from a short-term cyclical perspective. If the price action of the past couple of days has just been a shakeout of stale long positions then the exchange rate should turn up by the end of the day on Monday at the latest. If USD/JPY fails to mount a recovery during this turn window then it will send a powerful message to us that the medium-term trend has indeed changed and that a more serious decline is likely to follow. Key support is seen at the 38% retracement of the October to January advance near 102.00. Traction above the mid-January low of 102.85 would signal that the rate has turned.

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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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24 January 2014 13:00 GMT