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Price & Time: Euro Testing Key Resistance Zone

By , Sr. Currency Strategist
17 February 2014 13:15 GMT

Talking Points

  • USD/JPY rebounds off key Gann level
  • USD/CAD has important cycle turn window later this week
  • Euro testing key resistance zone

Unfamiliar with Gann Square Root Relationships? Learn more about them here.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

PT_FEB_17_body_Picture_3.png, Price & Time: Euro Testing Key Resistance Zone

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY found support today at the 4th square root relationship of the year-to-date high near 101.35
  • Our near-term trend bias is positive in the exchange rate while 101.35 holds
  • The 2nd square root relationship of the year’s low at 102.75 remains important resistance that needs to be breached soon if a more important move higher is to take hold
  • A cycle turn window is seen around the middle of the week
  • A daily close below 101.35 would turn us negative again on USD/JPY

USD/JPY Strategy: Like being square for the time being, but may look to buy a break of 102.75.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

101.35

101.70

101.90

102.55

*102.75

Price & Time Analysis: USD/CAD

PT_FEB_17_body_Picture_2.png, Price & Time: Euro Testing Key Resistance Zone

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD has come under steady pressure over the past few weeks since failing just below the 50% retracement of the 2009/2011 decline at 1.1235
  • Our near-term trend bias is lower in Funds while below 1.1120
  • Interim support is seen at 1.0950 ahead of then next major downside attraction at 1.0905
  • An important cycle turn window is seen at the end of this week/early next week
  • A daily close over the 1st square root relationship of the year’s high at 1.1120 would turn us positive on USD/CAD

USD/CAD Strategy: Shorts favored while below 1.1120, but the clock looks to be ticking for the decline.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.0905

1.0950

1.0960

1.1055

*1.1120

Focus Chart of the Day: EUR/USD

PT_FEB_17_body_Picture_1.png, Price & Time: Euro Testing Key Resistance Zone

The price action around bank holidays in the US or the UK is usually written off by FX analysts as inconsequential due to the “lack of volume” associated with these events. We have never really subscribed to this thinking as P&L will reflect moves (and the subsequent psychological knock on effects) the same whether there was high turnover or not. Our interest actually tends to perk up around these periods as we have noticed countless episodes over the years where bank holidays actually produced meaningful reversals if not full on changes in trend. Heading into today’s President’s Day holiday in the US our attention is on EUR/USD and USD/CHF as both are at points in their respective cycles where a change in direction looks quite possible. They are also both nearing key levels of resistance and support at 1.3735 and .8875. If at least a short-term turn is to materialize then we would expect it to do so over the next day or so from around these key levels. Continued European currency strength into late in the day on Tuesday would signal our cyclical view was off.

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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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17 February 2014 13:15 GMT