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Price & Time: Looking to Re-Align With Broader Trends

Price & Time: Looking to Re-Align With Broader Trends

2013-03-28 15:37:00
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_Re-aligning_body_Picture_4.png, Price & Time: Looking to Re-Align With Broader Trends

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/USD broke under the 1.2785 127% extension of Monday’s reaction high to print new year-to-date lows on Wednesday

- Bias is still lower with attention now on a Fibonacci confluence near 1.2720 and the 61.8% retracement of the advance from the 2012 low just below at 1.2675

-The near-term cyclical picture is a bit muddled at the moment, but a bigger picture Gann related turn window is seen starting around the end of next week

- The 1st square root progression from Wednesday’s low near 1.2865 is immediate resistance

- However, only strength above the 61.8% retracement of the week’s range at 1.2935 would shift our bias higher.

Strategy: The decline doesn’t look done to us quite yet, but a little nervous here as currency markets have a tendency to reverse trends around big holidays. Regardless, looking to sell the euro at 1.2895 with a stop just over 1.2940. If it goes our way will book profit on half ahead of 1.2720.

AUD/USD:

PT_Re-aligning_body_Picture_3.png, Price & Time: Looking to Re-Align With Broader Trends

Charts Created using Marketscope – Prepared by Kristian Kerr

- AUD/USD tested the 78.6% retracement of the year-to-date range on Tuesday before coming under pressure over the past couple of days

- Bias is still higher, but weakness below the 1.0390 1st square root progression from Tuesday’s high and the 1x1 Gann line from the year-to-date low in the 1.0390/80 area will turn us negative on the Aussie

- Recent peak came during a clear time cycle turn widow and further weakness now seen for at least a few more days

- A Gann level related to the year-to-date low in the 1.0465 area is immedate resistance

- Strength over a myriad of Gann lines and retracement levels between 1.0475 and 1.0520 is really needed, however, to signal that a more important advance is underway

Strategy: Took profit on the remainder of our long position from 1.0300 on the recent move back below 1.0410. Will look to sell on strength if 1.0380 gives way soon.

EUR/GBP:

PT_Re-aligning_body_Picture_2.png, Price & Time: Looking to Re-Align With Broader Trends

Charts Created using Marketscope – Prepared by Kristian Kerr

- EUR/GBP traded to its lowest level in over two-months on Thursday before finding support at the .8415 50% retracement of the 2011 to 2012 decline

- Our bias remain lower in the cross, but weakness below a convergence of several key Fibonacci levels between .8415 and .8385 needed to signal the start of the next leg lower

- Thursday is a minor cycle turn window and some strength seems likely for a couple of days, but a more important cycle point seen around the second half of next week

- A minor Fibonacci retracement at .8490 is immediate resistance

- However, only strength over a convergence of Gann, Fibonacci, and Andrews lines between .8525 and .8540 would turn on positive on the cross

Strategy: Sold the break of .8515, but got stopped out for a 35 pip loss in the volatility surrounding Monday’s open. Looking to sell on strength over the next couple of days at .8525. Stop over .8550.

Focus Chart of the Day: GBP/USD

PT_Re-aligning_body_Picture_1.png, Price & Time: Looking to Re-Align With Broader Trends

As we noted yesterday, next week looks important for several different currency pairs from a time cycle perspective. What makes this time period interesting is that several different methodologies all point to its significance. In Cable, the middle of next week will be 3-months or 90 degrees in time from the year-to-date high recorded on January 2nd. These cyclical points often prompt changes in trend. A recent example of this methodology working was in USD/JPY as the year-to-date high recorded in mid-March came 6-months or 180 degrees in time from the September low. With Cable now in a multi-week recovery, it looks like this turn window could provide an opportunity to re-align with the broader decline.

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

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

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

Need guidance managing risk on trades? Download the free Risk Management Indicator.

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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