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Price & Time: Gold Nearing a Critical Inflection Point

Price & Time: Gold Nearing a Critical Inflection Point

2013-06-19 12:16:00
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.

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

Foreign Exchange Price & Time at a Glance:

USD/CHF:

PT_gold_inflection_body_Picture_4.png, Price & Time: Gold Nearing a Critical Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

-USD/CHF continues to meander around the 3x1 Gann angle line of the year-to-date low in the .9185 area

-Our bias is lower in the exchange rate while below the .9320 2nd square root progression of the last week’s low

- The 7th square root progression of the year-to-date high at .9145 remains a key downside pivot with weakness below needed to signal that another move lower is underway

-Long-term cycles suggest a low of some importance should be seen this week

-Only a close over .9320 would signal that a shift in trend is underway

Strategy: Reduced short positions favored while below .9320.

NZD/USD:

PT_gold_inflection_body_Picture_3.png, Price & Time: Gold Nearing a Critical Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

-NZD/USD has come under pressure over the past few days following last week’s failure at the 6th square root progression of the year-to-high in the .8130 area

-While over .7940 our bias remains higher in the Kiwi

-A convergence of the 1x1 Gann angle line and the 6th square root progression of the year’s high at .8125 is now a clear upside pivot with a close above needed to confirm the start of a more signficant upside push

-A near-term cycle turn window is seen on Thrusday

-Only a close below .7940 would undermine the burgeoning positive technical structure and turn us negative

Strategy: Like holding long positions against .7940.

EUR/GBP:

PT_gold_inflection_body_Picture_2.png, Price & Time: Gold Nearing a Critical Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/GBP closed above the .8345 3x1 Gann angle line of the year-to-date high on Tuesday

-This puts the crossrate in a postive position and our bias is higher

-The 78.6% retracement of the late April decline at .8585 remains a key upside pivot with strength above needed to prompt a more important move higher towards .8625 and above

-Immediate support is seen at .8530

-However, only weakness below the long-term retracement at .8490 undermines the positive technical outlook and turns us negative on Euro-Sterling

Strategy: Like holding long positions against .8490.

Focus Chart of the Day: Gold

PT_gold_inflection_body_Picture_1.png, Price & Time: Gold Nearing a Critical Inflection Point

The end of this week and the start of the next looks extremely important for Gold from a cyclical perspective. Given how strong the trend leading into this turn window has been in a broader sense; a low of some sort materializing during this time remains our favored scenario. The extreme low reading in the Daily Sentiment Index (DSI) of just 11% bulls seems to further support this view. Ideally such a move would come from around the April lows in the 1320 area (or below), but such action is not required. If we are correct about a cyclical low then a multi-week to multi-month move higher should develop. Occasionally cyclical turn windows like the one seen between June 20-25 can lead to an acceleration in trend and with the metal trading in a narrowing range for the past two months this scenario cannot be completely ruled out. However, given the extreme low readings in sentiment this scenario looks unlikely.

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

Looking for a way to pinpoint sentiment extremes in the Gold in real time? Try the Speculative Sentiment Index.

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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