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Price & Time: Just How Important Was Last Week's Low in AUD/USD?

Price & Time: Just How Important Was Last Week's Low in AUD/USD?

Kristian Kerr, Sr. Currency Strategist

EUR/USD continues to meander between key long and short-term pivots while NZD/USD consolidates below important resistance. AUD/USD may have recorded an important cyclical low last week.

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_aussie_body_Picture_4.png, Price & Time: Just How Important Was Last Week's Low in AUD/USD?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD failed late last week at the 8x1 Gann angle line of the year-to-date high in the 1.3400 area
  • While above a Gann confluence near 1.3240 the near-term trend bias will remain higher
  • The 1.3400 Gann angle is now a near-term pivot, but a close over 1.3415 looks needed to set off a more important move higher in the Euro
  • Near-term cyclical studies are at a minor inflection point over the next 24-hours
  • Weakness below 1.3240 on a closing basis will undermine the immediate positive tone in the rate and turn us negative

EUR/USD Strategy: Still square. Looking to position in the next 24 hours once there is a bit more directional clarity.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3240

1.3275

1.3295

1.3360

*1.3400

Price & Time Analysis: NZD/USD

PT_aussie_body_Picture_3.png, Price & Time: Just How Important Was Last Week's Low in AUD/USD?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has moved steadily higher since finding support last week at the 10th square root progression of the year’s closing high
  • While over .7860 our near-term trend bias will remain higher in the Bird
  • The 38% retracement of the year’s range near .8075 is critical resistance and a close over this level is needed to prompt a more meaningful advance
  • A minor cyclical turn window is seen around the middle of the week
  • Back under .7860 would alter the near-term positive outlook in the exchange rate

NZD/USD Strategy: Like the long side while the Kiwi is over .7860

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

*0.7860

0.7945

0.7985

0.8035

*0.8075

Price & Time Analysis: EUR/GBP

PT_aussie_body_Picture_2.png, Price & Time: Just How Important Was Last Week's Low in AUD/USD?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/GBP has come under steady downside pressure since failing at the 4th square root progression of the 2Q13 low near .8760 at the start of the month
  • While below the 2nd square root progression of the year-to-date high at .8670 our near-term trend bias will remain lower in the cross
  • The 3rd square root progression of the year’s high at .8580 looks like critical near-term support with weakness below needed to trigger the next important decline
  • Minor cyclical turn windows are seen today and at the end of the week
  • A close back above .8670 would alleviate some of the downside pressure and turn us positive on the cross

EUR/GBP Strategy: Like the short side while below .8670.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/GBP

0.8540

*0.8580

0.8595

0.8625

*0.8670

Focus Chart of the Day: AUD/USD

PT_aussie_body_Picture_1.png, Price & Time: Just How Important Was Last Week's Low in AUD/USD?

We have been rather dismissive of the recent low in AUD/USD as a few cyclical techniques continue to point lower in the rate. However, a variety of longer-term Fibonacci time relationships between this month’s low and several key lows over the past 4 years is making us seriously question this negative cyclical assessment. Such a clear relationship amongst so many important lows is rare and raises the possibility that this month’s low could lead to a deeper upside correction (and possibly even a full fledge reversal in trend) in the weeks ahead. The .9300 level looks absolutely critical in this regard with a close over it the likely lynchpin to a much more important move higher. Shorter-term cyclical studies suggest weakness will be seen in the Aussie into the latter part of the week before another low of some kind is recorded. However, a close below .8900 would undermine the potential positive prospects of the Fibonacci time relationship.

--- 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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