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Price & Time: Commodity Currencies Responding Well

Price & Time: Commodity Currencies Responding Well

2013-10-16 12:00:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • EUR/USD holds just above major pivot
  • AUD/USD slams into Gann resistance
  • Important next few days for EUR/GBP

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Focus Chart of the Day: USD/NOK

PT_comm_body_Picture_4.png, Price & Time: Commodity Currencies Responding Well

As we have written in several recent notes, the latter half of last week was important from a timing perspective for a few ‘commodity currencies’ like Kiwi, CAD and NOK. While we have been concentrating on Kiwi because it has had the clearest cycle the others have shown some good cyclicality as well. USD/NOK for instance, peaked right during last week’s window near the 6.0630 61.8% retracement of the July to September move lower. Assuming yesterday’s move higher was just a “stutter step” then the rate should try to head lower into a minor turn window at the end of the week. Any weakness under 5.9500 on a daily close basis would be confirmation of a more important peak. Strength back through 6.0630, on the other the hand, would invalidate the cycle high and focus immediate attention higher.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_comm_body_Picture_3.png, Price & Time: Commodity Currencies Responding Well

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USDis in consolidation mode above the 1.3475 2nd square root progression of the year’s high
  • While above this level our near-term trend bias has to remain higher in the rate
  • Interim resistance is seen at 1.3595, but traction over the 8th square root progression of the year’s low at 1.3660 is really needed to signal a broader upside resumption
  • Near-term cycles are murky with minor turn windows seen today and early next week
  • A move under 1.3475 would undermine the positive tone in the rate and focus immediate attention lower

EUR/USD Strategy: Like the long side for now, but may look to exit and go short on a move through 1.3475.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3430

*1.3475

1.3550

1.3595

*1.3660

Price & Time Analysis: AUD/USD

PT_comm_body_Picture_2.png, Price & Time: Commodity Currencies Responding Well

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD traded to its highest level since mid-June on Tuesday before encountering resistance at the 10th square root progression of the year’s high in the .9545 area
  • Our near-term trend bias is higher in the Aussie while above the 6th square root progression of the year’s low at .9410
  • Traction over .9545 on a closing basis is needed to signal the start of a more important move higher in the rate
  • Thursday is a minor turn window
  • A daily close below .9410 would turn us negative on the Aussie

AUD/USD Strategy: Like the long side while over .9410.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*0.9410

0.9505

0.9530

*0.9545

0.9600

Price & Time Analysis: EUR/GBP

PT_comm_body_Picture_1.png, Price & Time: Commodity Currencies Responding Well

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/GBP traded to its highest level since early September last week before finding resistance at the 1x1 Gann angle line of the year’s high at .8505
  • While over the 61.8% retracement of the month-to-date advance near .8395 our near-term trend bias will remain positive in the cross
  • The 1x1 line now at .8490 is an important barrier that needs to be breached if the advance in EUR/GBP is going to develop into something more material
  • Early next week is a minor cycle turn window
  • A daily close below .8395 would turn us immediately negative on the cross

EUR/GBP Strategy: Like buying into the weakness exepcted over the next few days as long as .8395 remains intact.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/GBP

*0.8395

0.8420

0.8450

*0.8490

0.8510

--- 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 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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