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Price & Time: In Search of a Big USD Low

Price & Time: In Search of a Big USD Low

2014-03-27 12:10:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • Convergence of cyclical relationships point to USD strength ahead
  • EUR/USD closing in on major downside pivot
  • Big Gann resistance looms in AUD/USD

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

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_MAR_27_body_Picture_3.png, Price & Time: In Search of a Big USD Low

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD remains under pressure following the mid-month failure from just above the 50% retracement of the 2008/2010 decline
  • Our near-term trend bias is lower in the Euro while below 1.3875
  • The 2nd square root realtionship of the year’s high near 1.3730 is an important near-term pivot as weakness below is required to confirm that a broader move lower is unfolding
  • A minor cycle turn window is seen around the middle of next week
  • A move back over 1.3875 would re-focus higher

EUR/USD Strategy: We like the short side while below 1.3875.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3680

*1.3730

1.3755

1.3825

*1.3875

Price & Time Analysis: AUD/USD

PT_MAR_27_body_Picture_2.png, Price & Time: In Search of a Big USD Low

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD broke above the 50% retracement of the October/January decline near .9210 to trade at its highest level since November
  • Our near-term trend remains higher in the Aussie while above .9160
  • The 6th square root relationship of the year’s low at .9260 is important resistance and a possible point of failure over the next couple of days
  • A cycle turn window is seen over the next few days
  • A daily close below under .9160 would turn us negative on the exchange rate

AUD/USD Strategy: We like the long side while over .9160, but positions should probably be reduced approaching .9260.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

.9130

*.9160

.9235

*.9260

.9290

Focus Chart of the Day: FXCM Dollar Index

PT_MAR_27_body_Picture_1.png, Price & Time: In Search of a Big USD Low

On Monday we wrote a focus on the Dow Jones FXCM Dollar Index. The gist of the piece was that we thought a secondary low was setting up in the Greenback if it traded lower into the end of the week. The weakness we were looking for materialized as the Index has closed lower for 4 straight days now. If our cyclical analysis is correct then USD should turn up in the next few days and begin a general move higher. Our conviction is bolstered by the recent action in Gold as a similar cyclical relationship to the one that has seen the metal come under pressure recently should start to influence in the Index in the days ahead. We can’t rule out a final move lower, but only weakness after Monday under 10,500 would completely undermine the positive cyclical view. On the topside, a median line related to the 2013 high around 10,560 looks to be key resistance with a daily close over this level required to confirm that a bottom of some kind is indeed in place.

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--- 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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