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Price & Time: Is It Time For a Minor Turn?

Price & Time: Is It Time For a Minor Turn?

2013-03-11 17:26:00
Kristian A. Kerr,
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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_Time_for_a_minor_turn_body_Picture_4.png, Price & Time: Is It Time For a Minor Turn?

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/USD failed Friday near the 1.3125 5th square root progression of the year-to-date high and traded to its lowest level in almost 3 months

- While the exchange rate is below a confluence of various retracements in the 1.3165 area our bias will remain to the downside

- Immediate support is seen at a Gann line related to the early November low near 1.2950, but the 1.2890-1.2900 Gann/Fibonacci convergence zone looks critical

- Time cycles analysis indicates a turn window is in effect over the next couple of days in the euro and caution looks warranted

- The 1.3010 Gann level continues to act as a minor barrier, but strength above the 1.3165 Fibonacci cluster zone needed to signal a broader reversal

Strategy: We took profit on our long held euro short on the move through 1.3020 on Monday. Going to let this cyclical turn window play out before looking to re-position.

AUD/USD:

PT_Time_for_a_minor_turn_body_Picture_3.png, Price & Time: Is It Time For a Minor Turn?

Charts Created using Marketscope – Prepared by Kristian Kerr

- AUD/USD is in consolidation mode below a convergence of the 38% retracement and the 1x1 Gann line of year-to-date range in the 1.0300 area

- Bias is lower in the pair while under this level

- The 61.8% retracement of last week’s range in the 1.0185 area is now a key near-term pivot with weakness below required to setup a decline towards a key Fibonacci convergence near 1.0100

-While longer-term focused cyclical studies are negative into next month, short-term studies warn a turn of some magnitude could be attempted in the pair over the next couple of days

-A clear breach of 1.0300 would suggest a more important counter-trend is developing and shift our focus higher

Strategy: Exited short positions last week. Still square, but may look to buy a break over 1.0300 in the next few days.

EUR/CHF:

PT_Time_for_a_minor_turn_body_Picture_2.png, Price & Time: Is It Time For a Minor Turn?

Charts Created using Marketscope – Prepared by Kristian Kerr

- EUR/CHF’s recovery from the 1.2120 4th square root progression of the year-to-date high remains in full force with the cross touching its highest level in over a month on Friday

- The breach of a minor retracement zone near 1.2290 has shifted our bias back to the upside

- Focus is now on the 61.8% retracement of the year-to-date range in the 1.2400 area with strength through this level required to setup the next extension higher

- Minor turn window in effect over the next few days

- The second square root progression from the year-to-date high at 1.2345 is immediate support, but only weakness under a retracement confluence near 1.2770 turns us negative

Strategy: Stopped out of our short on the move through 1.2290 last week. We should have bought the break. Now looking to buy on weakness over the next few days at 1.2300 with a stop under 1.2250.

Focus Chart of the Day: EUR/USD

PT_Time_for_a_minor_turn_body_Picture_1.png, Price & Time: Is It Time For a Minor Turn?

In the first few issues of Price & Time we wrote extensively about the importance of April from a cyclical perspective for the currency markets and specifically the Euro. At the time, with the single currency encroaching on the 1.3700 level it looked like the euro would be making a high of some significance around this time. What a difference a few weeks makes! The Euro is now down 5% from these highs and the second half of April now looks like it could just as easily be a low. Therein lies the danger of anticipating direction into cyclical turn windows. With the first half of this week, late March and early next month all potential medium-term cyclical turn windows it is extremely difficult to forecast the trend heading into the bigger picture turn anticipated in late April. We find the best way to use these cyclical windows is by observing the action of the market heading into them. The more extended the trend heading into a window the more likely a reversal of magnitude will follow. With the later April cycle window related to both the all-time high and low in the currency; the trend that follows should be significant and influence trading on the rest of the year.

--- 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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