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Price & Time: Potential Head & Shoulders in Gold Clouds Technical Picture

Price & Time: Potential Head & Shoulders in Gold Clouds Technical Picture

2013-09-25 12:15:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • Gold technical picture turns cloudy
  • EUR/USD consolidates below key Gann level
  • EUR/GBP rebounds of important support

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Focus Chart of the Day: GOLD

PT_hS_body_Picture_4.png, Price & Time: Potential Head & Shoulders in Gold Clouds Technical Picture

The rebound in Gold off the 1x2 Gann angle line of the year’s closing low proved short-lived as the metal has given up much of the gains from last week. A potential head & shoulders topping pattern has now materialized on the daily chart with a neckline right around 1295. If triggered the pattern would project declines well below the year’s 1180 low. This obviously clouds our positive technical picture a bit and some caution is most definitely required here. However, our short-term cycles look pretty clear and argue that the metal should turn higher (or at least try) over the next couple of days. A move through 1350 would be strong evidence that a more important move higher is underway. A failure to gain upside traction over the next few days coupled with weakness below last week’s 1293 low would signal that our cyclical interpretation is off and that a much more sinister move lower is developing.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_hS_body_Picture_3.png, Price & Time: Potential Head & Shoulders in Gold Clouds Technical Picture

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD remains in consolidation mode below the 7th square root progression of the year’s low in the 1.3540 area
  • Our near-term trend bias is higher in the single currency while above the 2nd square root progression of last week’s high near 1.3335
  • The 1.3540 level guards upside attractions at 1.3600 and 1.3665
  • A very minor cycle turn window is seen around the end of the week
  • The 1st square root progression of last week’s high at 1.3445 is interim support, but only aggressive weakness below 1.3335 would turn the outlook more negative

EUR/USD Strategy: Like the long side while over 1.3335.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3335

1.3445

1.3505

*1.3540

1.3600

Price & Time Analysis: EUR/GBP

PT_hS_body_Picture_2.png, Price & Time: Potential Head & Shoulders in Gold Clouds Technical Picture

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/GBP traded last week to its lowest level since mid-January before finding support just ahead of the 5th square root progression of the year-to-date high in the .8350 area
  • While below .8460 our near-term trend bias will remain lower in the cross
  • Weakness below .8400 and .8350 needed to unlock more important downside attractions at .8285 and below
  • The next couple of days are a minor cycle turn window in the cross
  • The 1st square root progression of the year’s low at .8440 is resistance but only a close over .8460 suggests that a more important upside correction is under way

EUR/GBP Strategy: Like the short side while below .8460.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/GBP

*0.8350

0.8405

0.8415

0.8440

*0.8460

Price & Time Analysis: EUR/CHF

PT_hS_body_Picture_1.png, Price & Time: Potential Head & Shoulders in Gold Clouds Technical Picture

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/CHF traded to the bottom of a 2-month range in the 1.2275 area earlier this week before rebounding modestly over the past couple of days
  • Our near-term-trend bias remains lower in the cross while below the 50% retracement of the advance off the the 2012 low in the 1.2320 area
  • A move under 1.2275 is clearly needed to prompt a more serious decline towards more important support levels at 1.2245 and 1.2200
  • Minor turn windows are seen tomorrow and early next week
  • A close back over 1.2320 would alleviate the some of the immediate negative tone

EUR/CHF: Like being square for a couple of days.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/CHF

*1.2245

1.2275

1.2305

*1.2320

1.2380

--- 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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