Talking Points
- USD/JPY flirting with key downside pivot
- USD/CAD nearing technical inflection
- FXCM US Dollar Index closing in major support area
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Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY has come under fairly steady pressure since failing earlier in the month near 122.00
- A move under 119.30 will turn us negative on USD/JPY
- A move back through 121.20 is needed to re-instill upside momentum into the exchange rate
- Very minor turn windows are seen today and Friday
USD/JPY Strategy: Square.
| Instrument | Support 2 | Support 1 | Spot | Resistance 1 | Resistance 2 |
|---|---|---|---|---|---|
| USD/JPY | *119.30 | 119.50 | 119.50 | 120.20 | *121.20 |
Price & Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has fallen steadily since recording a new 6-year high last week
- Our near-term trend bias is higher in Funds while above 1.2360
- However, a move back through the February closing high at 1.2715 is needed to reinvigorate the uptrend
- A very minor turn window is eyed today
- A close below 1.2360 would turn us negative on USD/CAD
USD/CAD Strategy: Square
| Instrument | Support 2 | Support 1 | Spot | Resistance 1 | Resistance 2 |
|---|---|---|---|---|---|
| USD/CAD | *1.2360 | 1.2485 | 1.2485 | 1.2610 | *1.2715 |
Focus Chart of the Day: FXCM US DOLLAR INDEX
The aggressive turnaround in USD over the past few days has caught many people by surprise, but it really shouldn’t have. At the start of the month sentiment towards the Greenback was near record highs of optimism on some of the metrics we monitor. From a contrarian standpoint, such one-way thinking is almost always a giant “red flag” that the market is getting way ahead of itself. Now that the correction is underway the big question is how long will it last? It is tough question under normal circumstances, but even more so in this environment where two big figure plus ranges are the norm across the majors. Historically such deep and embedded positive sentiment takes more than just a few sessions to wash out, but this thinking has been flawed over the last six months as every dollar correction has basically retraced the minimum amount before continuing on its way. How the market reacts at key levels over the next few sessions will tell us whether this time will be any different. In the FXCM US Dollar Index, the key zone to watch looks to be between 11,885 and 11,830 as this area marks a nice convergence of several key levels including last week’s low, the February highs, a trendline connecting the December and February lows as well as the 38% retracement of the December-March advance. This zone should hold if the immediate uptrend remains on track. A clear failure to hold above these levels, on the other hand, would argue that a more material correction phase is underway.
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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 instructor@dailyfx.com. Follow me on Twitter @KKerrFX
