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Price & Time: USD Head Fake?

Price & Time: USD Head Fake?

Kristian Kerr, Sr. Currency Strategist

Talking Points

  • EUR/USD rallies back above 1.2500
  • Monday’s range extremes critical in the Aussie
  • USD/CAD sentiment close to neutral

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Price & Time: USD Head Fake?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD failed yesterday near the 2nd square root relationship of the year’s low at 1.2580
  • Our near-term trend bias is negative in the exchange rate while below 1.2580
  • A close under 1.2440 is now needed to confirm a resumption of the broader decline
  • Yesterday was a minor turn window
  • A close over 1.2580 would turn us positive on EUR/USD

EUR/USD Strategy: Like the shot side while below 1.2580.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.2355

*1.2440

1.2510

1.2535

*1.2580

Price & Time Analysis: AUD/USD

Price & Time: USD Head Fake?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD rallied to its highest level in two-weeks yesterday before stalling just shy of .8800
  • Our near-term trend bias is higher in the Aussie while above .8695
  • A move through .8800 is needed to trigger a more important leg higher in the exchange rate
  • A minor turn window is eyed today
  • A close under .8695 would turn us negative on AUD/USD

AUD/USD Strategy: Square

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

.8630

*.8695

.8710

.8750

*.8800

Focus Chart of the Day: USD/CAD

Price & Time: USD Head Fake?

The extreme positive sentiment picture in some of the main USD pairs at moment remains a concern and has us wondering whether the Buck can develop any real upside momentum with so much of the market looking for the same thing? This contrarian skepticism is countered a bit by our cyclical analysis which continues to point to general dollar upside in the weeks ahead. What to do? We like shifting some attention to the USD pairs that aren’t exhibiting sentiment extremes as they should be able to develop upside momentum a bit easier if the dollar does turn back up in earnest. One of the more interesting exchange rates on that front at the moment is USD/CAD. Following a successful break of the March high and test of the 127% extension of the March-July decline the pair has undergone what looks like a healthy correction. This has cleared out the negative sentiment situation pushing DSI figures in the CAD to a more neutral 36% Bulls (compared to 9% in GBP or 11% in JPY). A move back through 1.1355 (and possibly even 1.1325) over the next few days would get us excited about an upside resumption. However, sustained weakness under 1.1250 would warn the correction has more room to run.

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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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