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Price & Time: Coincidence or History Repeating?

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

Talking Points

  • Upside pivot in the Euro at 1.390
  • AUD/USD nearing key cycle turn window
  • NDX rebound from important support needs to be monitored closely

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_APR_17_body_Picture_3.png, Price & Time: Coincidence or History Repeating?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has come under modest pressure since failing late last week at the 78.6% retracement of the March to April decline in the 1.3900 area
  • Our near-term trend bias is positive in the Euro while over 1.3730
  • A move through 1.3900 is needed to signal that the uptrend is resuming
  • A minor cycle turn window is seen early next week
  • Only weakness below 1.3730 would turn us negative on the Euro

EUR/USD Strategy: Looking to buy into weakness against 1.3730.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3730

1.3760

1.3855

*1.3900

1.3930

Price & Time Analysis: AUD/USD

PT_APR_17_body_Picture_2.png, Price & Time: Coincidence or History Repeating?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD has come under steady pressure since failing last week at the 8th square root relationship of the year-to-date low in the .9460 area
  • Our near-term trend bias is higher in the Aussie while over .9265
  • Interim resistance is eyed around .9420, but a breach of .9460 is needed to re-instill upside momentum
  • An important cycle turn window is seen over the next week or so
  • A move under the 2nd square root relationship of the year’s high at .9265 would turn us negative on the Aussie

AUD/USD Strategy: Like the long side while over .9265, but caution is required as the rate heads into a long-term cycle turn window.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*.9265

.9295

.9340

.9420

*.9460

Focus Chart of the Day: NASDAQ 100

PT_APR_17_body_Picture_1.png, Price & Time: Coincidence or History Repeating?

The NASDAQ 100 has been exceptionally weak since the start of March with the peak coming a day after the 5-year anniversary of the bear market low in the SPX (the NDX actually bottomed in November 2008). We can’t help but wonder if the price action in technology stocks this year is a “mirror image” of the topping process that unfolded in 2007? For those who don’t remember, the SPX peaked in early October that year. The NDX did not peak until November – almost a month later. This time around the NDX has seemingly peaked first with the SPX not putting in a nominal high until the start of this month and almost a month after the NDX. This obviously could just be just one big coincidence. If it is then the rebound from the 200-day moving average (red line on chart) earlier in the week should quickly begin to pick up momentum as the uptrend re-asserts itself and tech stocks regain their leadership. If it isn’t then the index will likely rollover again soon. A move under the 200-day MA near 3,400 would be a powerful sign that a much more important decline is unfolding.

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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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17 April 2014 12:00 GMT