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Price & Time:The Squeeze Play

Price & Time:The Squeeze Play

2014-10-09 12:15:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • EUR/USD price action over next few days critical in determining how significant the correction really is
  • USD/JPY challenging key downside pivot
  • Gold rally gathers pace

Get real time volume on your charts for free. Click HERE

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Price & Time:The Squeeze Play

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY continues to flirt with a key downside pivot at 108.00
  • Our near-term trend bias is higher in the exchange rate while above this level on a closing basis
  • Strength back through 108.75 is needed to re-instill upside momentum in the pair
  • A minor turn window is eyed tomorrow
  • A close under 108.00 will turn us negative on USD/JPY

USD/JPY Strategy: Like holding only minimal long position while above 108.00. Will go square on a close below.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*107.35

107.50

107.55

108.30

*108.75

Price & Time Analysis: GOLD

Price & Time:The Squeeze Play

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD has moved briskly higher since successfully testing last year’s low near 1179 earlier in the week
  • Our near-term trend bias remains lower in the metal while below 1247
  • Interim support is eyed at 1206, but a move under 1179 is really needed to set off a more important decline
  • A minor turn window is tomorrow
  • A close over 1247 would turn us positive on Gold

XAU/USD Strategy: Square

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1179

1206

1230

1235

*1247

Focus Chart of the Day: EUR/USD

Price & Time:The Squeeze Play

Yesterday I read 5 different bank notes saying to short the euro around 1.2650 with a stop above 1.2700. I wasn’t that surprised to see us trading near 1.2800 when I woke up this morning. The big question for most is determining whether that was the extent of the squeeze or are we going to get several weeks of this? It is still too early to tell and the action over the next few days will be instrumental in deciphering this riddle. I am leaning towards a multi-week affair because the cyclical timing seems right for one, but also because sentiment and positioning have gotten so lopsided recently that a multi-week corrective episode is probably the only thing that will neutralize the picture a bit. How far down the euro goes over the next three days or so will determine whether my hunch is right. I say this because it is natural to expect the trend to try to re-assert itself after 4-5 up days, but if this effort is a meek one (say easily holds 1.2610) or there isn’t one at all then the bulls will become emboldened and this correction could quickly gather some steam a la the 3rd quarter of 2013.

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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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