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Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

2013-05-17 11:48:00
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:

USD/JPY:

PT_stopping_point_yen_body_Picture_4.png, Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

-The USD/JPY uptrend has stalled over the past few days at the 102.65 200% extension of the late April decline

-Our bias remains higher in the exchange rate, but traction over the 102.65 level is now needed to pivot the market higher towards 103.15 and above

-Some scope for a minor cycle high today, but next longer-term cycle turn window is not until month-end (See Focus Chart of the Day)

-Minor Gann support seen in the 101.40 area

-However, only aggressive weakness below a confluence of several short-term retracements and extensions in the 100.50/80 area would turn us negative on the dollar

Strategy: Long positions favored whilst over 100.50

GBP/USD:

PT_stopping_point_yen_body_Picture_3.png, Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

-GBP/USD has come under aggressive downside pressure since hitting time and price resistance last week around 1.5580

-Our bias is lower in Cable with the 9th square root progression of the year-to-date high at 1.5195 now looking like a clear downside pivot to further weakness

-However, near-term focused cycles favor strength for a couple more days

-The 1x4 Gann angle line from the month-to-date high in the 1.5305 area is immediate resistance

-Only aggressive strength back over the 2nd square root progression of the May high at 1.5355 would shift our bias to positive in the pound

Strategy: Short postions favored in Cable whilst below 1.5355

NZD/USD:

PT_stopping_point_yen_body_Picture_2.png, Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

-NZD/USD mas come under further pressure over the past few days and recorded a new year-to-date low on Friday

-Out bias is still negative towards the Kiwi with focus now on the .8075 161.8% projection of the mid-April move lower as measured from the late April high

-This level could act as a strong support and a close below is required to maintain the immediate downside tack

-A medium-term cyclical turn window is in effect around the middle of next week

-Gann resistance seen at .8215 with a close above this level required to alter the negative technical tone in the Bird

Strategy: Like short positions whilst below .8215.

Focus Chart of the Day: USD/JPY

PT_stopping_point_yen_body_Picture_1.png, Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

Negative sentiment towards the yen continues to be a major cause of concern for us. The extreme readings in various surveys of late have historically led to position washouts of some magnitude. However, as we pointed out on Wednesday the pair recently took out important time resistance that argues for a further advance. Looking at various cycles the next turn window or time resistance of significance looks to be around month-end as this will be an idealized 8.6 month Pi cycle from the key low recorded last September. If the exchange rate continues higher into this timeframe this looks to be a natural stopping point and a counter-trend move of some importance could develop there. We will write more on this as it unfolds.

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

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

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