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Price & Time: Next Week is Critical for Equities From a Timing Perspective

By , Sr. Currency Strategist
14 March 2014 12:00 GMT

Talking Points

  • EUR/USD fails at important long-term retracement, bigger decline ahead?
  • Gold closing in on important resistance zone - top possible
  • Major inflection point for equities next week

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

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_MAR_14_body_Picture_3.png, Price & Time: Next Week is Critical for Equities From a Timing Perspective

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD recorded a new multi-year high yestersday before encountering strong resistance at the 50% retracement of the 2008/2010 decline near 1.3970
  • Our near-term trend bias remains positive in the Euro while above the 2nd square root relationship of year’s high at 1.3730
  • The 1.3970 levels remains a critical resistance that must be overcome soon if the exchange rate is to embark on a more important move higher
  • A medium-term turn window is seen later next week
  • A close under 1.3730 would shift our near-term trend bias to negative

EUR/USD Strategy: Like the long side while over 1.3730.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3730

1.3850

1.3885

1.3910

*1.3970

Price & Time Analysis: GOLD

PT_MAR_14_body_Picture_2.png, Price & Time: Next Week is Critical for Equities From a Timing Perspective

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GOLD touched it highest level since September earlier today
  • Our near-term trend bias is higher in the metal while above 1348
  • The 78.6% retracement of the August/December decline at 1379 is the next big action/reaction level
  • A broader cycle turn window is seen through the middle of next week
  • A daily close under 1348 would turn us negative on the metal

GOLD Strategy: We like the long side while over 1348, but positions should probably be reduced here.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GOLD

*1348

1365

1372

*1379

1395

Focus Chart of the Day: S&P 500

PT_MAR_14_body_Picture_1.png, Price & Time: Next Week is Critical for Equities From a Timing Perspective

Recently we have highlighted the cyclical importance of next week for several markets, but our main focus is on the US equity market as so many things are aligning there. With the relentless grind higher and maniacal sentiment in the main indices over the past few months our bias has been for a top of some kind to come out of next week. However, the weakness being exhibited in equities over the past few days has come a little early and we now have to be open to the possibility of “cyclical inversion” (i.e. a low) if the pace of the decline in the indices picks up heading into next week’s turn period. A turn around today or over the weekend that sees the indices bounce back to near recent highs would ironically be bearish in our view as it likely would set up the important top we are looking for next week. Stay tuned.

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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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14 March 2014 12:00 GMT