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Price & Time: Big High in ’Risk’ or Just More of the Same?

By , Sr. Currency Strategist
21 March 2014 12:10 GMT

Talking Points

  • Important timing surrounds recent extremes in the S&P 500, big move coming?
  • Important top in EUR/USD?
  • Gold nearing key support, reaction there should be very telling

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_21_body_Picture_3.png, Price & Time: Big High in 'Risk' or Just More of the Same?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has come under steady pressure over the past couple of days following last week’s failed attemp to overcome key Fibonacci resistance at 1.3970
  • Our near-term trend bias is lower in the Euro while below 1.3930
  • The 2nd square root relationship of the year’s high at 1.3730 remains a key downside support
  • 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

EUR/USD

1.3710

*1.3730

1.3795

1.3830

*1.3930

Price & Time Analysis: GOLD

PT_MAR_21_body_Picture_2.png, Price & Time: Big High in 'Risk' or Just More of the Same?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD reversed sharply during a key cycle turn window at the start of the week from just above the 6th square root relationship of the 2013 low
  • Our near-term trend bias is now lower in the metal following the breach of support near 1350
  • A convergence of various Fibonacci and Gann levels between 1310/18 makes this a critical support with traction below needed to confirm that a more important move lower is unfolding
  • A minor cycle turn window is seen around the middle of the week
  • A daily close back over 1380 would turn us positive on the metal

XAU/USD Strategy: We like selling on strength over the next few days against 1380.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

1285

*1310/18

1340

1355

*1380

Focus Chart of the Day: S&P 500

PT_MAR_21_body_Picture_1.png, Price & Time: Big High in 'Risk' or Just More of the Same?

The S&P 500 is at an important inflection point. The high on March 7th just shy of 1890 had strong timing as it fell on the 5-year anniversary window of the 2009 low. Anniversaries are always potentially important for students of Gann as reversals in trend seem to be more prevalent around them. The 60-month and a day duration of the move higher is an eerie mirror image of the last bull cycle which started on October 10, 2002 and ended on October 11, 2007. A possible measured move in time. The high at the beginning of the month also has strong price symmetry as from low to high the SPX has rallied 182% (rounding down). This is 3.14 (Pi) times the 2007-2009 decline of 58%. Confusing the picture is the price action from Monday as the index reversed sharply from 1830 during a “Pi cycle” turn window (8.6 months x 7) related to the 2009 low. Is the move higher over the past few days a resumption of the trend or just a re-test of the high before heading lower again? With strong timing at both extremes all we can do is observe and await a clear break for a directional signal.

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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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21 March 2014 12:10 GMT