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Price & Time: Risk On?

By , Sr. Currency Strategist
02 April 2014 11:35 GMT

Talking Points

  • Move through March high in SPX removes major cyclical overhang
  • EUR/USD resuming lower?
  • Jury still out on next move in GBP/USD

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

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_APR_2_body_Picture_3.png, Price & Time: Risk On?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has moved modestly higher since finding support late last week from just below the 2nd square root relationship of the year’s high in the 1.3730 area
  • Our near-term trend bias is lower in the Euro while below 1.3785
  • The 1.3730 level remain a key downside pivot with weakness below needed to confirm that a more important decline is unfolding
  • A very minor cycle turn window is seen today
  • Only a move back over 1.3785 would turn us positive on the exchange rate

EUR/USD Strategy: We like the short side while below 1.3785.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3875

1.3835

1.3785

1.3765

*1.3730

Price & Time Analysis: GBP/USD

PT_APR_2_body_Picture_2.png, Price & Time: Risk On?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD tested resistance at the 61.8% retracement of the late Feb/March decline near 1.6685 on Monday
  • Our near-term trend bias is lower in Cable while below 1.6685
  • A move under 1.6600 is needed to confirm a near-term top
  • A minor cycle turn window is seen tomorrow
  • A move through 1.6685 will turn us positive on the exchange rate

GBP/USD Strategy: We like the short side while below 1.6685.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

1.6560

*1.6600

1.6645

*1.6685

1.6730

Focus Chart of the Day: S&P 500

PT_APR_2_body_Picture_1.png, Price & Time: Risk On?

The price extremes of the March range in the S&P 500 have cyclical significance. Overnight the top end of this range was breached. This action further confirms the importance of the mid-March low and perhaps more importantly removes a major negative cyclical overhang for the index. Further gains are now favored in the weeks ahead and possibly even into the start of the 3rd quarter. If for some reason the index fails to achieve a daily close over 1890 this week it would raise the possibility that recent action has been a false break (especially if the Dow continues to lag). However, only swift weakness under 1830 would turn the technical picture negative and set into motion a much more volatile 2Q14. This looks much less likely following the break overnight of the March 7th high.

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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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02 April 2014 11:35 GMT