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Price & Time: Do or Die Time for the Greenback

Price & Time: Do or Die Time for the Greenback

2013-08-05 15:00:00
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:

EUR/USD:

PT_do_orDie_body_Picture_4.png, Price & Time: Do or Die Time for the Greenback

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD failed last week during a cyclical turn window near the 61.8% retracement of the year-to-date range in the 1.3340 area
  • However, while above the 2nd square root progression of last month’s high at 1.3110 our near-term trend bias has to remain higher in the exchange rate
  • Traction over 1.3340 is needed to alleviate concerns that a cyclical peak is in place and trigger a more important move higher
  • Short-term cycle studies are negative over the next couple of days
  • The 2nd square root progression of the June high near 1.3185 is immediate support, but only under 1.3115 turns us negative on the rate

Strategy: Took profit on our euro longs. Like the short side if 1.3115 gives.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3110

1.3185

1.3250

1.3300

*1.3340

GBP/USD:

PT_do_orDie_body_Picture_3.png, Price & Time: Do or Die Time for the Greenback

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD rebounded aggressively last week from just below the 50% retracement of the July range in the 1.5125 area
  • However, while below last month’s 1.5435 cyclical high our trend bias will remain negative in Cable
  • The 4th square root progression of the 2Q13 high near 1.5250 is a near-term downside pivot, but weakness below 1.5125 is really needed to force a more important move lower
  • Short cycles are bit muddled here, but a minor turn window is seen over the next day or so
  • Strength over 1.5435 will turn us positive on the Pound

Strategy: Continue to like the short side while below 1.5435.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.5125

1.5250

1.5345

1.5375

*1.5435

NZD/USD:

PT_do_orDie_body_Picture_2.png, Price & Time: Do or Die Time for the Greenback

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has come under steady downside pressure since failing last month at the 50% retreacement of the late 2011 range in the .8100 area
  • Weakness below .7860 has shifted our trend bias to negative in the Kiwi
  • A convergence of Fibonacci and Gann levels in the .7650 area is now key support and weakness below is needed to trigger the next important decline
  • Tuesday and the end of the week look like minor turn cycle turn windows in the rate
  • The polarity principle suggests the .7860 area is now key resistance and strength back through this level is needed alter the negative structure and turn us positive on the Bird

Strategy: Like selling Kiwi on strength over the next few days.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

0.7590

*0.7650

0.7760

*0.7860

0.7945

Focus Chart of the Day: FXCM DOLLAR INDEX

PT_do_orDie_body_Picture_1.png, Price & Time: Do or Die Time for the Greenback

The next couple of days look important for the FXCM Dollar Index. We have been looking for a resumption of the broader USD uptrend and the move last week through key resistance at 10,800 seemingly confirmed this notion. If our interpretation of the cyclical picture is correct then the index should form another higher low over the next day or two and move higher again into the end of the week. Traction over the 61.8% retracement of the July range at 10,890 during this time will be further proof that a new leg higher is indeed underway. The 10,800 area is now immediate support, but only weakness below 10,700 would signal that our broader positive cyclical bias is wrong and a more ominous USD decline is in the making.

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

Looking for a way to pinpoint sentiment extremes in the Euro 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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