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Price & Time: Big Week for the Dollar

Price & Time: Big Week for the Dollar

Kristian Kerr, Sr. Currency Strategist

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:

EUR/USD:

PT_CAD_body_Picture_4.png, Price & Time: Big Week for the Dollar

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD overcame the 4th square root progression of the year-to-date high in the 1.3240 area to trade to its highest level in over a month
  • While above the 2x1 Gann angle line of the year’s low in the 1.3160 area our near-term trend bias will remain higher
  • A confluence of various Gann levels in the 1.3300 area makes this a critical resistance and a close above is needed to prolong the advance
  • Cycles point to the latter half of the week as a key cycle turn window
  • The 4th square root progression of the year’s low is immediate support, but only weakness below 1.3160 turns us negative on the single currency

Strategy: Like holding long positions for a few more days while 1.3160 holds.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3160

1.3200

1.3275

*1.3300

1.3360

GBP/USD:

PT_CAD_body_Picture_3.png, Price & Time: Big Week for the Dollar

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has moved steadily higher over the past few weeks since finding support at the 12th square root progression of the year’s high in the 1.4810 area
  • While over 1.5250 our near-term trend bias will remain higher in Cable
  • A convergence of Gann and Fibonacci levels between 1.5420 and 1.5440 is key resistance and a close above this zone is needed to trigger a further advance
  • Cycles studies point to the latter part of the week as being an important inflection point for the Pound
  • Weakness below 1.5250 is required to undermine the immediate positive tone and turn us negative on the pair

Strategy: Like holding reduced long positions in Cable for the next few days as long as support at 1.5250 remains intact.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.5250

1.5325

1.5380

*1.5440

1.5500

XAU/USD:

PT_CAD_body_Picture_2.png, Price & Time: Big Week for the Dollar

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD traded to its highest level in over a month last week before finding resistance at the 161.8% projection of the late June advance in the 1348 area
  • Our near-term trend bias has to remain higher while above 1310, but failure at key symmetry during last week’s cyclical window increases the potential for a more important top
  • Traction over 1348 is required to alleviate this concern and set up a more important move higher in the metal
  • A minor cycle turn window is seen around the middle of the week
  • A close under 1310 would be further evidence of a more important peak and turn us negative

Strategy: Like being square here for a few days. Will look to position accordingly on a break through 1348 or 1310.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1283

*1310

1334

*1348

1371

Focus Chart of the Day: USD/CAD

PT_CAD_body_Picture_1.png, Price & Time: Big Week for the Dollar

USD/CAD historically has been one of the harder cyclical pictures for us to decipher (likely a result of the compressed volatility in the rate). However, over the past few months the picture has seemingly become clearer as the pair has respected a few key cycle turn windows and is trading in a more rhythmic fashion. An analysis of the medium-term cycles suggests the next few days have the potential to spark a turn in the pair and we expect the USD will try to resume its broader uptrend during this timeframe. The 78.6% retracement of the June to July advance near 1.0235 and the 4th square root progression of the year-to-date high around 1.0195 are natural levels from where this reversal could develop. Weakness below the latter support past Thursday, however, would undermine the burgeoning positive cyclicality.

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

Looking for a way to pinpoint sentiment extremes in CAD 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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