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Price & Time: The Potential Importance of Symmetry in GBP/USD

Price & Time: The Potential Importance of Symmetry in GBP/USD

Kristian Kerr, Sr. Currency Strategist

GBP/USD fails at symmetry while the S&P 500 bounces off key support. USD/CAD break major resistance.

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_GBP_symm_body_Picture_4.png, Price & Time: The Potential Importance of Symmetry in GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has come under pressure over the past few days after encountering resistance just above the 6th square root progression of the year-to-date low in the 1.3430 area
  • While over the 1.3220 2nd square root progression of the month-to-date high our near-term trend bias will remain higher in the Euro
  • The 1.3415/30 area remains a key upside pivot with traction above required to set off a more important advance
  • The first part of next week is a medium-term cycle turn window
  • Weakness below 1.3220 would undermine the positive technical structure in the rate and turn us negative

EUR/USD Strategy: Still square, but may buy a closing break of 1.3415/30.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3220

1.3300

1.3355

1.3375

*1.3415/30

Price & Time Analysis: USD/CAD

PT_GBP_symm_body_Picture_3.png, Price & Time: The Potential Importance of Symmetry in GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD has traded to its highest level in over a month following Wednesday’s breach of a key Fibonacci retracement cluster in the 1.0440 area
  • While over 1.0470 our near-term trend bias is higher in Funds
  • The 61.8% retracement of the 2007 to 2009 advance in the 1.0585 area is key resistance and traction over this level is needed to trigger the next important move higher
  • A minor cycle turn window is seen around the middle of next week
  • A close back under 1.0470 would undermine the immediate positive tone in Funds

USD/CAD Strategy: Like the long side in Funds while over 1.0470.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.0470

1.0505

1.0555

*1.0585

1.0610

Price & Time Analysis: S&P 500

PT_GBP_symm_body_Picture_2.png, Price & Time: The Potential Importance of Symmetry in GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • S&P 500 traded to lowest level since early July on Thursday before finding support near the 2nd square root progression of the June low in the 1640 area
  • While below 1710 our near-term trend bias will remain lower in the index
  • The 1740 level remains a critical downside pivot with a close below needed to confirm that a more important reversal in trend is underway
  • The middle of next week is a medium-term cycle turn window
  • A move through the 3rd square root progression of the June low near 1673 would alleviate some of the downside pressure, but only over 1710 turns the structure more clearly positive

S&P 500 Strategy: Still like the short side for at least a few more days.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

S&P 500

1627

*1640

1657

1673

*1710

Focus Chart of the Day: GBP/USD

PT_GBP_symm_body_Picture_1.png, Price & Time: The Potential Importance of Symmetry in GBP/USD

Cable failed at an important level on Wednesday. The 1.5720 area is the 100% projection of the mid-July advance as measured from the August 1st low and represents a key point of market symmetry. If the advance in GBP/USD over the past month and a half has been just a correction within the broader decline in place since the start of the year then 1.5720 is a natural point where the downtrend should try to resume. If, on the other hand, the advance since early July is a more important reversal then 1.5720 should be overcome in relatively short order after the current near-term overbought condition is worked off. A likely near-term inflection point and a price level on the downside that we will be watching closely over the next few days is 1.5500. This area marks a convergence of several key Gann levels including the 1x1 angle line from the year’s high and the 1x4 line of the year’s low. How the rate reacts here will likely set up the next directional move of importance

--- 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 GBP 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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