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:
Charts Created using Marketscope – Prepared by Kristian Kerr
-USD/JPY has stalled its most recent advance just under the 78.6% retracement of last month’s range in the 93.80 area
- While the exchange rate is above a Gann level related to both extremes of the February range near 91.85 our focus is to the upside
- Strength over 93.80 and probably 94.60 is required, however, to signal the start of a more meaningful thrust higher
- Near-term time cycle analysis turns more positive during the second half of the week
- Under Gann support at 91.85 shifts focus lower, but only weakness below the 90.90 fourth square root progression from the year-to date high signals the start of a more significant decline
Strategy: Currently flat, but looking to buy of break of 93.85 or sell on weakness through 90.90.
Charts Created using Marketscope – Prepared by Kristian Kerr
- Cable has recovered smartly since finding support at the 161.8% extension of the November to January advance near 1.4990
- Inability to get above the 1.5200 Gann level related to the January high keeps our focus lower
- The 1.4990 extension now looks like a key downside pivot with weakness below this level needed to force renewed downside
-Fibonacci price & time harmonic related to the key lows in 2012 warns there is potential for a more important counter trend move to develop in the days ahead
-Above 1.5200 needed to confirm this reversal and shift our bias higher
Strategy: We locked in our profit on the move through 1.5070. Going to wait a few days and see how the cycles play out before re-positioning, but a break of 1.4990 will probably get us short.
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/CHF staged a reversal last week from just above the 78.6% retracement of the September to January advance in the 1.2115 area
- Recovery from there has so far stalled at a minor retracement convergence near 1.2290 and strength through this level is still needed to shift attention higher
- Shorter-term focused time cycle analysis is turning negative on the cross over the next few days
- The 50% retracement of the most recent advance near 1.2200 is immediate support
- Weakness below 1.2115, however, is needed to signal a more important downside resumption
Strategy: Still short with a stop just over 1.2290.
Focus Chart of the Day: Dow 30
With the Dow recording new all-time highs on Tuesday the equity markets were very much a big topic of conversation. Tomorrow marks the 4-year anniversary of the low from the current advance and we will be closely watching for any signs of a counter-trend reaction. As we wrote on Friday, anniversary dates of big highs and lows are important in Gann cycle analysis and according to the methodology they can spark reversals in trend – especially in the 4th year. We must admit we are not expecting much at this this juncture given historical analogs of the indices show a propensity to not immediately reverse following new all-time highs, but a turn window is a turn window. A quick glance at the Gann wheel indicates resistance directly related to the March 2009 low is at 14,384 and 14,505. An adverse reaction at these levels over the next couple of days could set up an interesting counter-trend trade.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.
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