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Price & Time: Is It Almost Time to Sell AUD/USD again?

Price & Time: Is It Almost Time to Sell AUD/USD again?

Kristian Kerr, Sr. Currency Strategist

EUR/USD is on the verge of confirming a change in trend. NZD/USD still looks higher while EUR/GBP flirts with key support and AUD/USD nears an important cyclical inflection point.

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:

Price & Time Analysis: EUR/USD

PT_AUD_Sell_body_Picture_4.png, Price & Time: Is It Almost Time to Sell AUD/USD again?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD surpassed last month’s 1.3345 high on Thursday to trade to its highest level since mid-June
  • The breach of this level is potentially significant and a close over 1.3345 will shift the near-term trend bias to positive
  • The 5th square root progression of last month’s low at 1.3300 is now relevant support and a close back under this level is needed to re-invigorate downside possibilities
  • The cyclical picture is unclear at the moment, though short studies suggest a minor high could be seen over the next day or so
  • A close over 1.3345 will confirm that a near-term trend shift has occurred, but traction over the 2Q13 high near 1.3415 is really needed to undermine the broader negative cyclical picture

EUR/USD Strategy: Square here. Need some cyclical clarity before the next operation.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3260

*1.3300

1.3355

1.3375

*1.3415

Price & Time Analysis: NZD/USD

PT_AUD_Sell_body_Picture_3.png, Price & Time: Is It Almost Time to Sell AUD/USD again?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD found support at the start of the week from just below the 2x1 Gann angle line of the 2009 low in the .7760 area
  • Subsequent strength back through .7860 has shifted the near-term trend back to positive in the Bird
  • The 4th square root progression of the year-to-date low near .8030 is once again important resistance and a close through this level is required to set up more material strength in the rate
  • A minor turn window is seen around the end of the week
  • Only weakness back .7860 would undermine the burgeoning positive structure and turn us negative on the Kiwi

NZD/USD Strategy: Like the long side while the Kiwi is over .7860, but will wait for better levels to position.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

*0.7860

0.7890

0.7980

*0.8030

0.8075

Price & Time Analysis: EUR/GBP

PT_AUD_Sell_body_Picture_2.png, Price & Time: Is It Almost Time to Sell AUD/USD again?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/GBP traded to its highest level in over 4-months last week before failing at the 4th square root progression of the 2Q13 low near .8760
  • Subsequent weakness below the 3rd square root progresion of the April low .8670 has shifted the near-term trend bias to negative in the cross
  • A key downside pivot is now seen at 2x1 Gann angle line of the 2Q13 low near .8580 and a clear breach of this level should spark a more important move lower
  • Near-term cycles studies suggest the end of the week is a minor turn window
  • Only back through .8720 improves the negative picture

EUR/GBP Strategy: Like selling the cross on strength against .8720.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/GBP

0.8540

*0.8580

0.8615

0.8670

*0.8720

Focus Chart of the Day: AUD/USD

PT_AUD_Sell_body_Picture_1.png, Price & Time: Is It Almost Time to Sell AUD/USD again?

A couple of weeks ago we wrote about the likely downside “pain trade” in AUD/USD after it briefly pierced the .9300 neckline of a multi-week inverse head & shoulders pattern. The sharp decline in the wake of the false pattern breakout materialized as we envisioned with the rate falling all the way to .8850 before finding support. The snapback from this level has been fairly aggressive, but the rate looks to be nearing a cyclical crossroads of sorts over the next couple of days. If this recovery is just a correction before another leg lower then it should run out of gas sometime early next week (Mon/Tues). Our idealized stopping point would be somewhere around the 61.8% and 78.6% retracements of the July to August decline in the .9135-.9215 area. Continued strength into Wednesday over .9215 would signal that a more important advance is occurring.

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

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.

Looking for a way to pinpoint sentiment extremes in the Aussie 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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