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Price & Time: Key Couple of Days For Commodity Bloc

By , Sr. Currency Strategist
18 February 2014 13:00 GMT

Talking Points

  • EUR/USD testing important resistance
  • Aussie probes key retracement level
  • Gold reverses during cycle turn window

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

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_FEB_18_body_Picture_3.png, Price & Time: Key Couple of Days For Commodity Bloc

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has rallied to its highest level is three weeks to test the 61.8% retracement of the December/February range
  • Our near-term trend bias is lower in the Euro, but a close over the 2nd square root relationship of the year’s low at 1.3710 will shift higher
  • A near-term pivot is seen at 1.3655 and weakness below this level is needed to signal a downside resumption
  • A cycle turn window is seen here
  • A daily close over 1.3710 will shift our near-term trend bias to positive

EUR/USD Strategy: Short against a daily close over 1.3710.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3590

*1.3655

1.3725

1.3735

*1.3770

Price & Time Analysis: AUD/USD

PT_FEB_18_body_Picture_2.png, Price & Time: Key Couple of Days For Commodity Bloc

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD failed on Tuesday at the 38% retracement of the October to January decline near .9080
  • Our near-term trend bias remains higher in the Aussie while above .8910
  • The .9080 level remains key resistance and traction above is needed to signal a more important leg higher
  • A cycle turn window is seen over the next day or so
  • A daily close below .8910 would turn us negative on AUD/USD.

AUD/USD Strategy: We like the long side while over .8910, but positions should be trimmed into this turn window.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*.8910

.8960

.9025

*.9080

.9140

Focus Chart of the Day: GOLD

PT_FEB_18_body_Picture_1.png, Price & Time: Key Couple of Days For Commodity Bloc

We have been on the lookout for a general USD revival this week, but so far it is proving illusive at least with respect to the European currencies. On the European side of the spectrum we will give it a few more hours before shifting more focus and attention to Gold and the commodity bloc. In our view, the most important potential cycle turn window at work this week is in USD/CAD. This still looks to be a few days off, but an important low looks to be setting up soon. Gold, however, is a different story as the metal has turned rather abruptly from just under key Fibonacci resistance right at the start of the cycle turn window we highlighted last week. Is this the start of a broader USD advance? It certainly could be, but follow on weakness back under 1300 is really needed to signal that this is anything more than just an immediate correction of an overbought condition.

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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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18 February 2014 13:00 GMT