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Price & Time: Important Break Looming

By , Sr. Currency Strategist
09 April 2014 12:00 GMT

Talking Points

  • The “forgotten" commodity currency is closing in on a major pivot
  • USD/JPY closes in on key Gann level
  • GBP/USD fails to record a new high close for the year by a fraction of a pip

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

PT_apr_9_body_Picture_3.png, Price & Time: Important Break Looming

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY closed right on the 1st square root relationship of the year’s low at 101.75 yesterday
  • Our near-term trend bias is now negative on the exchange rate
  • Focus is now on the 4th square root relationship of the year’s high at 101.35 with a daily close below needed to confirm the start of a more powerful decline
  • A minor cycle turn window is eyed towards the end of the week
  • A move back over 103.75 would turn us positive on the exchange rate

USD/JPY Strategy: We like selling into strength against 103.75.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

100.75

*101.35

102.00

102.70

*102.75

Price & Time Analysis: GBP/USD

PT_apr_9_body_Picture_2.png, Price & Time: Important Break Looming

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD moved through the 61.8% retracement of the February/March decline at 1.6685 on Tuesday and failed to achieve a new high close for the year by a fraction of a pip
  • Our near-term trend bias is now higher in Cable
  • The March high at 1.6785 is key resistance with a move over this level needed to prolong the advance
  • An important turn window is seen around the middle of next week
  • Only weakness below the 2nd square root relationship of the year’s high at 1.6560 would turn us negative on the Pound

GBP/USD Strategy: We like buying into any weakness over the next couple of days.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

1.6615

1.6655

1.6740

*1.6785

1.6820

Focus Chart of the Day: USD/CAD

PT_apr_9_body_Picture_1.png, Price & Time: Important Break Looming

The low in USD/CAD at 1.0909 on February 19th was significant from a cyclical perspective as a whole host of relationships converged there. The market reaction from this turn window confirmed the importance of the timing as the exchange rate turned practically on a dime and traded to a new multi-year high over 1.1250 by late March. The story since then is much different as Funds has lost over 3 big figures and is knocking on the door of a break of 1.0909. Most chartists can see 1.0909 is a significant pivot, but for us a breach of this level will be even more important as in the longer-term scheme of things it will remove a major timing element of the bullish case we had been building for USD/CAD. In the near-term, a fairly important turn window is seen around the middle of next week. Some kind of low is expected around this time. We like holding shorts until then provided 1.1010 continues to cap.

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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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09 April 2014 12:00 GMT