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Price & Time: Moment of Truth for European Currencies

Price & Time: Moment of Truth for European Currencies

2014-02-14 13:00:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • USD/JPY under renewed pressure
  • GOLD trades to 3-month highs
  • Important cycle turn window coming up for USD/CHF

Unfamiliar with Gann Square Root Relationships? Learn more about them here.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

PT_FEB_14_body_Picture_3.png, Price & Time: Moment of Truth for European Currencies

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY has come under further pressure since failing on Wednesday near the 38% retracement of the year-to-date range at 102.55
  • Our near-term trend bias is positive in the exchange rate
  • The 2nd square root relationship of the year’s low at 102.75 is critical resistance that needs to be overcome soon to signal that a more important move higher is taking hold
  • A cycle turn window is seen around the middle of next week
  • A daily close below the 4th square root relationship of the year’s high at 101.35 would turn us negative again on USD/JPY

USD/JPY Strategy: Like being square for the time being, but may look to buy a break of 102.75.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

101.35

101.70

101.80

102.55

*102.75

Price & Time Analysis: GOLD

PT_FEB_14_body_Picture_2.png, Price & Time: Moment of Truth for European Currencies

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD has broken through a myriad of key resistance levels over the past few days to trade at its highest level in over three months on Friday
  • Our near-term trend bias remains higher in the metal while over 1281
  • A confluence of several key Fibonacci and Gann levels between 1318/1321 is the next important upside attraction/pivot
  • A cycle turn window is seen around the middle of next week
  • A daily close below the 3rd square root realtionship would turn us negative on the metal.

XAU/USD Strategy: Continue to like the long side while over 1281. May look to trim existing positions around the middle of next week.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1281

1297

1315

*1321

1336

Focus Chart of the Day: USD/CHF

PT_FEB_14_body_Picture_1.png, Price & Time: Moment of Truth for European Currencies

The short-term cyclical picture in EUR/USD has been a bit of a mess of late as the choppy price action has made the pair difficult to analyze. As such, our main focus in Europe has been on USD/CHF which seems to have a little clearer picture. In USD/CHF, the next two days look potentially important as several short-term cycles will be converging. This argues for a reversal of some kind over the next couple of trading days. A move back over the 50% retracement of the December to January range at .8975 would probably be evidence enough of a short-term bottom. Further weakness after Monday, however, would mean our cyclical interpretation was wrong. This would likely set up a deeper decline that at least tests last year’s low.

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

--- 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

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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