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Price & Time: The Turn Window in USD/JPY

Price & Time: The Turn Window in USD/JPY

2013-04-05 16:04:00
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_turn_windowusdjpy_body_Picture_4.png, Price & Time: The Turn Window in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/USD recorded a new year-to-date low on the first day of the Gann cycle turn window (Thursday) before rebounding sharply to trade to its highest level in almost two weeks

-Close over the 1.2840 2x1 Gann angle line from the year-to-date high has turned us positive on the exchange rate

-Focus now on the 1.3060 61.8% of the November to February advance with strength over this level needed to confirm the integrity of the latest push higher

-Medium-term Gann cycle turn window in effect, but another key cycle turn window seen late next week as well

-Weakness back under 1.2840 turns us negative on the euro

Strategy: Did not get short in the turn window with the pair well through the 1x2 Gann line and plenty exposures elsewhere. Looking to get long (in reduced size) at 1.2920 with a stop under 1.2840.

AUD/USD:

PT_turn_windowusdjpy_body_Picture_3.png, Price & Time: The Turn Window in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

-AUD/USD failed for a second time on Wednesday during a Fibonacci time cycle turn window at the 1.0500 78.6% retracement of the year-to-date range

-Subsequent weakness below the 1.0390 1st square root progression from this week’s high has turned us negative

-Focus now on on a convergence of Gann and Fibonacci levels between 1.0365 and 1.0350 with weakness below needed to expose 1.0315

-Near-term focused cycles remain negative for a few more days

-Strength over the 2x1 Gann angle line from the year-to-date low at 1.0440 needed to turn us positive

Strategy: Looking to get short on strength over the next day or so against 1.0410 with a stop just over 1.0455.

USD/CAD:

PT_turn_windowusdjpy_body_Picture_2.png, Price & Time: The Turn Window in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

-USD/CAD rebounded sharply on Friday from the key 1.0120/40 Fibonacci/Gann confluence zone to trade to its highest level in two weeks

-Strength over a myriad of retracements between 1.0170/85 has turned us positive on Funds

-A Gann level related to the year-to-date high at 1.0240 is the next level of interest with strength over this needed to prompt the next push higher

-Short-term focused time cycles analysis is positive for a few more days

-Only weakness under 1.0120 turns us negative on the pair

Strategy: Want to get long Funds at 1.0170 with a stop just under 1.0120.

Focus Chart of the Day: USD/JPY

PT_turn_windowusdjpy_body_Picture_1.png, Price & Time: The Turn Window in USD/JPY

The next few days are a Pi cycle turn window related to the 2011 low (17.2 months). Our idealized setup would have been to see further weakness leading into it as it would have afforded an opportunity to align with the broader uptrend. The market (as it tends to do) has surprised with USD/JPY erasing all off the weakness of the past three weeks in a little less than two trading days to record new multi-year highs. This risk now according to our cyclical methodology is that the pair can record some sort of high over the next few days. While last night’s move in JGBs confirms these markets can turn on a dime, the probability of a meaningful turn here looks slim going into the window. We say this because turn windows (especially related to Pi) tend to work best when the market is severely extended leading into them. USD/JPY is only on the second day of this move higher and isn’t really exhibiting signs of being overextended. We respect the methodology, however, and can’t completely rule out the possibility. Some sort of meaningful weakness will be needed to peak our interest, though. Some key levels to watch during this turn window are the 61.8% retracement of the 2008-2011 decline near 97.25 and the 127% extension of the March decline around 97.80. On the downside the Gann squares related to the February low at 96.60 and 95.60 could be important pivots. More on this if it unfolds.

--- 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.

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

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