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Price & Time: USD Goes Bid!

By , Sr. Currency Strategist
20 March 2014 12:15 GMT

Talking Points

  • EUR/USD reverses sharply from key resistance, reaction at oncoming support needs to be watched closely
  • USD/CAD touches multi-year high – what next?
  • Gold weakness leading the way?

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_20_body_Picture_3.png, Price & Time: USD Goes Bid!

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has come under aggressive downside pressure over the past couple of days following another failed attempt to overcome key Fibonacci resistance at 1.3970
  • Our near-term trend bias is lower in the Euro while below 1.3930
  • The square root relationship of the year’s high at 1.3730 is a key downside pivot with traction below needed to confirm that a more important move lower is unfolding
  • A cycle turn window is seen next week
  • Only aggressive strength back over the year’s closing high at 1.3930 would turn us positive again on the Euro

EUR/USD Strategy: Look to sell the Euro into strength.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

1.3710

*1.3730

1.3765

1.3830

*1.3930

Price & Time Analysis: USD/CAD

PT_MAR_20_body_Picture_2.png, Price & Time: USD Goes Bid!

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD overcame the 50% retracement of the 2009 to 2011 decline at 1.1235 yesterday to trade at its highest level in over 4.5 years
  • Our near-term trend bias remains higher in Funds while above 1.1120
  • The 127% extension of the Jan/Feb decline at 1.1310 is the next resistance of note
  • A minor turn window is seen early next week
  • A daily close below the 2nd square root relationship of the February low at 1.1120 would turn us negative on the exchange rate

USD/CAD Strategy: Like the long side while over 1.1120

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.1120

1.1220

1.1270

*1310

1.1350

Focus Chart of the Day: GOLD

PT_MAR_20_body_Picture_1.png, Price & Time: USD Goes Bid!

Gold peaked into the cycle turn window we highlighted last week with a dramatic outside day reversal on the Monday focus date from just over the 6th square root relationship of the 2013 low at 1385. Follow through weakness has been persistent and seen the metal erode through initial support at 1349. This keeps us looking lower with focus now on a key confluence of support between 1318 and 1310. It is difficult to predict with any high rate of success the extent of a market move following one of these turn windows. For this we rely more on observation and prefer to study how an instrument reacts at key price points following a turn. If the reversal earlier this week has just been a minor correction within a burgeoning uptrend then 1318/10 should probably hold. An easy move under 1310 would be a serious warning sign that a more important decline is unfolding. A very minor cycle turn is possible around the end of the week.

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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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20 March 2014 12:15 GMT