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Price & Time: Did Gold Just Run Into a "Death Cycle"?

By , Sr. Currency Strategist
06 March 2014 13:00 GMT

Talking Points

  • USD/JPY threatening break of key resistance
  • Cable in consolidation mode
  • Gold turns 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: USD/JPY

PT_MAR_6_body_Picture_3.png, Price & Time: Did Gold Just Run Into a "Death Cycle"?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY tested key resistance earlier today at the 2nd square root relationship of the year-to-date low near 102.75
  • Our near-term trend bias is higher while above 101.35
  • A daily close over 102.75 is needed to confirm that a more important move higher in the rate is underway
  • A minor cycle turn window is seen early next week
  • Only a daily close below the 4th square root relationship of the year’s high at 101.35 would focus lower

USD/JPY Strategy: Looking to buy a break of 102.75.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*101.35

102.35

102.65

*102.75

103.40

Price & Time Analysis: GBP/USD

PT_MAR_6_body_Picture_2.png, Price & Time: Did Gold Just Run Into a "Death Cycle"?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD remains in consolidation mode above the 38% retracement of the February range near 1.6600
  • Our near-term trend bias is positive in Cable while over 1.6600
  • The year’s closing high near 1.6740 is an important pivot that needs to be overcome on a daily close basis to signal a resumption of the uptrend
  • The middle of next week is a medium-term cycle turn window
  • A close under 1.6600 would turn us negative on the Pound

GBP/USD Strategy: Like the long side while over 1.6600.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.6600

1.6690

1.6715

*1.6740

1.6820

Focus Chart of the Day: GOLD

PT_MAR_6_body_Picture_1.png, Price & Time: Did Gold Just Run Into a "Death Cycle"?

In the book 45 Years in Wall Street, Gann wrote about the 45 day trend cycle length in stocks and commodities. He basically said to be on the lookout for a reversal around this interval if a commodity was trending aggressively with little pause into it. Many traders today refer to this as the “Gann Death Cycle”. On Monday, Gold touched its highest level in over four months. The trading day count was 44 days from last year’s low. On day 45 the market turned lower. A deeper correction is certainly possible, but the metal remains in a positive overall position while 1300 holds. The latter half of next week and the first part of the week of March 17th look extremely important for XAU/USD from a longer-term cyclical perspective. We expect this to be a big inflection point.

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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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06 March 2014 13:00 GMT