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Price & Time: The Next 48 Hours Are Important for EUR/USD

Price & Time: The Next 48 Hours Are Important for EUR/USD

2013-08-12 12:14:00
Kristian Kerr, Sr. Currency Strategist
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USD/JPY & Gold rebound off key support levels while GBP/USD fails at a familiar Gann level. The EUR/USD cyclical picture should clear up over the next 48 hours.

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: USD/JPY

PT_EURO_48_body_Picture_4.png, Price & Time: The Next 48 Hours Are Important for EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY traded to its lowest level in almost 2-months late last week before finding support around the 1x2 Gann angle line of the 1Q13 low in the 96.30 area
  • Subsequent strength back through 96.60 alleviates some of the downside pressure, but a close over a key Fibonacci confluence near 97.50 is needed to turn the near-term trend positive
  • The 78.6% retracement near 95.50 remains key support and weakness below this level is needed to signal a resumption of the near-term downtrend
  • Monday is a minor cyclical turn window
  • A close above the Fibonacci convergence near 97.50 is required to turn us positive on the exchange rate

USD/JPY Strategy: Square, but may look to sell against 97.50.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

94.95

*95.50

96.75

97.00

*97.50

Price & Time Analysis: GBP/USD

PT_EURO_48_body_Picture_3.png, Price & Time: The Next 48 Hours Are Important for EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD failed late last week at the 1x1 Gann angle line of the year’s high in the 1.5565 area
  • While above 1.5375 our near-term trend bias has to remain higher in Cable
  • A close over 1.5565 is required to signal a resumption of the near-term trend
  • A minor turn window is seen today
  • Weakness below 1.5375 on a closing basis will turn us negative and opens the way for a deeper correction lower in the Pound

GBP/USD Strategy: Small longs favored while over 1.5375.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.5375

1.5445

1.5470

*1.5565

1.5630

Price & Time Analysis: GOLD

PT_EURO_48_body_Picture_2.png, Price & Time: The Next 48 Hours Are Important for EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD tested the 4th square root progression of the July last week in the 1280 area but could not close below this important support level
  • While below 1348 our near-term trend bias will remain lower in the metal
  • Weakness under 1280 on a closing basis is needed to set up a more important decline
  • Near-term cycle studies suggest the next day or so is a minor turn window
  • Strength above 1348 on a closing basis would alter the negative technical structure and turn us positive on Gold

GOLD Strategy: Prefer the short side while below 1348.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1280

1302

1325

*1348

1365

Focus Chart of the Day: EUR/USD

PT_EURO_48_body_Picture_1.png, Price & Time: The Next 48 Hours Are Important for EUR/USD

The Euro is at an important juncture from a price & time perspective. Last week’s breach of the July high near 1.3340 alleviated a potential medium-term negative cyclical influence. However, the single currency’s failure to surpass the 2Q13 high at 1.3415 keeps EUR/USD in a longer-term negative position. Is the weakness we are seeing to start the week the longer-term negative cycle beginning to re-assert its influence or is just a “breather” before the Euro makes another more important push higher? The shorter-term cyclical picture should be able to help us determine which scenario is unfolding as if is the latter then EUR/USD should start to turn up again over the next 24-48 hours. Weakness into Wednesday below 1.3170 would be strong evidence that a more important decline is developing.

--- 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 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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