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Price & Time: Stocks Nearing An Important Cyclical Crossroads

Price & Time: Stocks Nearing An Important Cyclical Crossroads

Kristian Kerr, Sr. Currency Strategist

EUR/USD takes out the 2Q13 high while NZD/USD fails at an important Gann line. S&P 500 nearing a short-term 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_spx_body_Picture_4.png, Price & Time: Stocks Nearing An Important Cyclical Crossroads

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD surpassed the 2Q13 high on Tuesday, but so far follow through has been limited
  • While over 1.3220 our near-term trend bias will remain higher in the exchange rate
  • A convincing close over 1.3415 is required to shift the broader trend to positive and set up a more important advance in the weeks ahead
  • The first half of next week is a medium-term cycle turn window
  • Intermediate support is seen around 1.3300, but only weakness below 1.3220 undermines the positive structure in the Euro

EUR/USD Strategy: Still square. Need to see a more convincing close over 1.3415.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3220

1.3300

1.3385

*1.3415

1.3480

Price & Time Analysis: USD/CAD

PT_spx_body_Picture_3.png, Price & Time: Stocks Nearing An Important Cyclical Crossroads

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD has moved steadily higher since finding support a couple of weeks ago near the 2x1 Gann angle line of the 2012 low
  • Subsequent strength back through 1.0380 has shifted our near-term trend bias back to positive
  • The 1.0440 area remains an important upside pivot with traction above required to trigger a more important move higher in Funds
  • However, a medium-term cycle turn window is seen around the end of the week
  • The 3rd square root progression of the year’s high near 1.0310 is key support and only weakness below this level will turn us negative on USD/CAD

USD/CAD Strategy: Like small longs while above 1.0310.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.0310

1.0370

1.0425

*1.0440

1.0500

Price & Time Analysis: NZD/USD

PT_spx_body_Picture_2.png, Price & Time: Stocks Nearing An Important Cyclical Crossroads

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD traded to its highest level since late May on Monday before encountering resistance near the 2x1 Gann angle line of the year’s closing high in the .8150 area
  • While over .7860 our near-term trend bias will remain higher in the Kiwi
  • The .8030 Gann level is a near-term pivot, but traction over .8150 is really needed to signal that a more important move higher is underway
  • A minor turn window is seen on Thursday and Friday
  • A close below .7860 would undermine the burgeoning positive tone and turn us negative on the Bird

NZD/USD Strategy: If the Kiwi is going to turn higher it should happen in the next couple of days. Like buying on weakness into Friday.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

*0.7860

0.7900

0.7930

0.8030

*0.8150

Focus Chart of the Day: S&P 500

PT_spx_body_Picture_1.png, Price & Time: Stocks Nearing An Important Cyclical Crossroads

The early August cycle turn window in the S&P 500 that we have been monitoring has proven formidable. Last week’s beak of the July 26th 1675 low was significant from both a price & time perspective and the impulsive decline on its breach seems to further prove its importance. There is now a *possibility* that the index will embark on a greater corrective process in the weeks ahead. Information on just how important this decline really is should be gleaned over the next few days. We say this because the next day or so is cyclically positive for the index. Continued weakness during this time would be a sign of a strong short-term downtrend. The more important date, however, looks to be around the middle of next week. There is a medium-term cycle turn window due around this time and if this move lower has just been a ‘run of the mill' correction within a broader uptrend then this is where is should attempt to turn higher. Failure to do so, on the other hand, will be very bearish indeed.

--- 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 SPX 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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