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Price & Time: GBP at a Major Inflection Point

Price & Time: GBP at a Major Inflection Point

2013-08-29 12:00:00
Kristian Kerr, Sr. Currency Strategist
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GBP/USD sitting atop a major pivot while EUR/USD threatens key support at 1.3220. A correction is due in Gold.

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_gbp_body_Picture_4.png, Price & Time: GBP at a Major Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD’s week long consolidation just below the 2Q13 high has led to a fairly aggressive downside break
  • However, while over the 2nd square root progression of the year’s high at 1.3220 our near-term trend bias has to remain higher
  • The 1.3415/30 area remains a critical upside pivot with traction through this area needed to set off a more significant move higher in the exchange rate
  • The latter part of this week is a medium-term cycle turn window
  • Weakness below 1.3220 especially on a closing basis would point to a trend shift and turn the outlook negative

EUR/USD Strategy: Will sell a closing break of 1.3220.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3180

*1.3220

1.3250

1.3335

*1.3415

Price & Time Analysis: AUD/USD

PT_gbp_body_Picture_3.png, Price & Time: GBP at a Major Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD tested the .8890 88.6% Fibonacci retracement near of the early August advance on Wednesday
  • Under .8890 will turn our trend bias lower, but weakness below .8850 is really needed to turn the chart more overtly negative
  • Gann related resistance near .9040 needs to be overcome to alleviate some of the immediate downside pressure
  • Minor cycle turn windows are seen today and early next week
  • A close under the year’s low at .8850 would signal the broader downtrend is resuming.

AUD/USD Strategy: Bit of a mess cyclically. Square here.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*0.8845

0.8890

0.8935

0.9000

*0.9040

Price & Time Analysis: GOLD

PT_gbp_body_Picture_2.png, Price & Time: GBP at a Major Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD overcame the June high on Wednesday and traded to its higest level since the middle of May
  • Our near-term trend bias remains higher in the metal and will remain so while above Fibonacci polarity in the 1350 area
  • A potential near-term stopping point on the upside is the 1440 100% projection of the July range
  • Cycle studies suggest the next few days could provoke at least a minor turn
  • Intermediate support is seen around 1385, but only a close under 1350 would turn the technical outlook to negative in the metal

XAU/USD Strategy: Like the long side while over 1350.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1348

1385

1413

1424

*1441

Focus Chart of the Day: GBP/USD

PT_gbp_body_Picture_1.png, Price & Time: GBP at a Major Inflection Point

The 1.5500 area is proving to be instrumental for Cable. From a Gann or market geometry perspective the area has significance as it marks a clear convergence of the 1x1 Gann angle line and the 6th square root progression as drawn from the year’s high. The break through the 1x1 line at the beginning of the month turned the outlook much more positive for GBP/USD, but ultimately the reaction around this level over the next few days will tell whether this latest move lower is just a back test of the break out point or a full fledge reversal. Wednesday’s weakness below the 1x1 line initially pointed to the latter, but this weakness could not be sustained on closing basis leaving us with little clarity. For us a move back over the 50% retracement of the year’s range near 1.5575 will signal an upside resumption while traction below (close) the 1x1 Gann angle line now at 1.5485 will suggest a broader reversal. Until then it is just wait and see.

--- 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 Pound 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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