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Price & Time: Break of Multi-Month Consolidation Eyed in USD/JPY

Price & Time: Break of Multi-Month Consolidation Eyed in USD/JPY

Kristian Kerr, Sr. Currency Strategist

Talking Points

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Focus Chart of the Day: USD/JPY

PT_JPY_break_body_Picture_4.png, Price & Time: Break of Multi-Month Consolidation Eyed in USD/JPY

We will be closely monitoring USD/JPY over the next few days as our cyclical analysis suggests the exchange rate may try to breakout (or down) from the contracting range that has dominated trading since the latter half of May. A simple 61.8% Fibonacci time retracement of the advance off the 3Q12 low to this year’s high will be later this week (trading days). Given there is no real discernable trend leading into this “turn” window a move out of the range during this timeframe looks like the more probable scenario. A break of recent daily swing points at 99.00 or 96.55 would be initial evidence of such an occurrence.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_JPY_break_body_Picture_3.png, Price & Time: Break of Multi-Month Consolidation Eyed in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD traded to a new year-to-date high on Tuesday before encountering resistance just below the measured move of the July to August advance at 1.3800
  • Our near-term trend bias is positive on the Euro while over 1.3655
  • The 1.3800 measured move is resistance, but the real upside attraction is likely the 61.8% retracement of the 2011 to 2012 decline in the 1.3830 area
  • The second half of the week is potentially important turn window in the exchange rate
  • A daily close under the 8th square root progression of the year’s low at 1.3655 would turn us negative on the Euro

EUR/USD Strategy: Reduced longs favored while over 1.3655.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3655

1.3675

1.3750

1.3800

*1.3830

Price & Time Analysis: AUD/USD

PT_JPY_break_body_Picture_2.png, Price & Time: Break of Multi-Month Consolidation Eyed in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD traded to its highest level since early June before reversing sharply during the mid-week cycle turn window
  • Our near-term trend bias is now lower and will remain so while below .9755
  • The 8th square root progression of the year’s low at .9600 is immediate support with traction below exposing more important downside attractions at .9555
  • A minor cycle turn window is seen early next week
  • Any strength back through today’s high of .9755 would shift the trend bias back to positive in the Aussie

AUD/USD Strategy: Now square and looking to get short.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*0.9555

0.9600

0.9615

0.9660

*0.9755

Price & Time Analysis: GOLD

PT_JPY_break_body_Picture_1.png, Price & Time: Break of Multi-Month Consolidation Eyed in USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD has moved steadily higher since finding support during last week’s turn window from just under the 1x1 Gann angle line of the year’s closing low
  • Tuesday’s close over the the 1322 2nd square root progression of last week’s low has shifted the near-term trend bias back to positive in the metal
  • The 1x2 Gann angle line of the August high at 1338 is clear resistance with a daily close above this level now needed to prompt further upside
  • A minor cycle turn window is seen later this week
  • Weakness under the 1x1 Gann angle line of the year’s closing low now at 1268 would turn us negative on the metal

XAU/USD Strategy: Looking to buy on weakness.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1268

1301

1331

*1338

1350

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

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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