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Price & Time: Godot Still A No Show

Price & Time: Godot Still A No Show

2014-10-06 12:05:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • Euro near key retracement level
  • Gold closing in on 2013 low
  • GBP/USD breaks important support near 1.6000

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Price & Time: Godot Still A No Show

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD broke under the 12th square root relationship of the year’s high at 1.2585 to trade at its lowest level since August of 2012
  • Our near-term trend bias is lower while below 1.2705
  • The 78.6% retracement of the 2012/2014 range near 1.2455 looks to be the next important downside attraction in the rate
  • A turn window of some importantance is eyed later this week
  • A close over 1.2705 would turn us positive on the euro

USD/JPY Strategy: Like holding reduced long short positions while below 1.2705.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.2455

1.2495

1.2550

1.2585

*1.2705

Price & Time Analysis: GOLD

Price & Time: Godot Still A No Show

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD has come under further pressure to trade within a few dollars of last year’s 1179 low
  • Our near-term trend bias is lower in Gold while below 1235
  • A close under 1179 is needed to set off a more important decline
  • A minor turn window is eyed later this week
  • A close over 1235 would turn us positive on the metal

XAU/USD Strategy: Square

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1179

1193

1195

1212

*1235

Focus Chart of the Day: GBP/USD

Price & Time: Godot Still A No Show

Cable broke under key support near 1.6000 on Friday to trade to its lowest level since November of last year. The decline in Sterling since the Scottish referendum has caught many off guard as a relief rally was naturally expected. Most seem to attribute the weakness in the pair to the UK side of the equation and the notion that rate hikes there will be put off. I’m not sure I really buy that. For me the driver is the Greenback. With the political risk out of the way, GBP/USD has just become another European currency to sell against USD. The market is in love with the Buck at the moment – perhaps too much so if you pay any attention to historical extremes like sentiment, positioning (Commercials are the most short USD they have ever been), rate-of-change, etc. However, the market has been ignoring these historical red flags for well over a month and it was probably only a matter of time before Cable came under the crosshairs of the USD bull mafia. Should the mythical USD correction ever materialize, GBP/USD should be in good shape from a relative strength perspective as it has held up better than most other European currencies during the recent rout. Timing methods have been admittedly dreadful over the past month or so as USD has knifed through them all, but there is a decent convergence of timing relationships in the Pound around the second half of the week that point to some sort of reversal attempt around this time.

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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.

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

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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