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Price & Time:Turn in the Pound?

Price & Time:Turn in the Pound?

2013-03-04 16:36:00
Kristian Kerr, Sr. Currency Strategist
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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.

Foreign Exchange Price & Time at a Glance:

EUR/USD:

PT_pound_turn_body_Picture_4.png, Price & Time:Turn in the Pound?

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/USD resumed its decline late last week and broke under key Gann support in the 1.3010 area to touch its lowest level since mid-December

- Focus is still lower, but a close under 1.3010 is really needed to setup a deeper decline towards a cluster of various retracements from last year’s key lows just under 1.2900

- Shorter-term focused time cycle analysis is positive on the pair for a couple more days, but a major turn window seen next month

- A convergence of various Gann fan lines from the low recorded last November around 1.3070 is immediate resistance

- A Fibonacci confluence near 1.3165 is critical, however, and only strength over this area signals the start of a more important trend reversal

Strategy: Stay short with a stop just over 1.3170.

NZD/USD:

PT_pound_turn_body_Picture_3.png, Price & Time:Turn in the Pound?

Charts Created using Marketscope – Prepared by Kristian Kerr

- The decline in NZD/USD from the 8530 78.6% retracement of the 2011 range remains in force

- Multiple closes under the .8250 third square root progression from the year-to-date high keeps our focus lower

- A minor retracement from the December low around .8195 is immediate support and a break under this level needed to prompt a test of a convergence of several key Gan and Fibonacci supports near .8160

-Near-term focused time cycle analysis suggests strength should be seen in the pair over the next couple of days

-Gann progression at .8250 is now resistance, but only strength over a retracement cluster near .8300 undermines the immediate negative tone in the pair

Strategy: We are still short Kiwi. Tighten stop to just over .8300. That should be far enough away to sustain our position through the strength the cycles say could be seen over the next couple of days.

EUR/GBP:

PT_pound_turn_body_Picture_2.png, Price & Time:Turn in the Pound?

Charts Created using Marketscope – Prepared by Kristian Kerr

- EUR/GBP is in consolidation mode since failing just above a confluence of various long-term retracements in the .8800 area

- While over the 61.8% retracement of the February range in the .8585 area our bias is higher

- However, strength (ideally on a closing basis) over the .8720 second square root progression from the year-to-date high is really required to signal the start of something more meaningful on the upside

- Near-term time cycles, however, turn clearly negative around the middle of the week

- Weakness under .8585 during this time will shift our attention lower

Strategy: Short-term technical picture is a little messy in Euro/Sterling. Looking to buy a break of .8270 or sell a break of .8585 over the next few days.

Focus Chart of the Day: GBP/USD

PT_pound_turn_body_Picture_1.png, Price & Time:Turn in the Pound?

The price action in Cable should be monitored closely over the next few days. A Fibonacci time relationship between Friday’s low and the lows seen in mid-November and June of last year suggests greater potential for a turn of some magnitude to develop here. With the pair finding demand just off a Fibonacci extension directly related to the November to January advance on Friday the relationship is seemingly further bolstered. A close over 1.5070 would further confirm, while any weakness under 1.4990 would immediately undermine the time/price relationship.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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