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Price & Time: The 119.60 Level Looks Critical For USD/JPY

Price & Time: The 119.60 Level Looks Critical For USD/JPY

2014-12-09 13:15:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Price & Time: The 119.60 Level Looks Critical For USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD traded at its lowest level in over two years yesterday
  • Our near-term trend bias is negative on the exchange rate while below 1.2460
  • The 1.2235 area is interim support ahead of the 50% retracement of the all-time low and all-time high at 1.2135
  • A turn window of some signficance is seen this week
  • A close over 1.2460 would turn us positive on EUR/USD

EUR/USD Strategy: Like holding only reduced short positions while below 1.2460.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.2135

1.2235

1.2355

1.2385

*1.2460

Price & Time Analysis: AUD/USD

Price & Time: The 119.60 Level Looks Critical For USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD fell to its lowest level in over four years this morning
  • Our near-term trend bias is lower in the Aussie while below .8405
  • A median line channel at .8225 is key support with weakness below this area needed to signal a resumption of the downtrend
  • A cycle turn window is eyed later this week
  • A close above .8405 would turn us positive on AUD/USD

AUD/USD Strategy: Like the short side while under .8405

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*.8225

.8250

.8290

.8340

*.8405

Focus Chart of the Day: USD/JPY

Price & Time: The 119.60 Level Looks Critical For USD/JPY

USD/JPY is undergoing its biggest correction since the BOJ announced its umpteenth version of quantitative easing in October. The exchange rate is now over off over two big figures from the multi-year high recorded yesterday and more importantly tested a key pivot around 119.60 earlier this morning. The 119.60 level is important for us as it marks the 2nd square root relationship of the year’s high. Our general rule of thumb in strong trends like the one we have seen in USD/JPY over the past few weeks is to give the benefit of the doubt to the prevailing trend as long as spot remains above the 2nd square root relationship. This has served us well so far and kept us from getting negative too early – despite our inclination to do so with sentiment at positive extremes (some might say euphoric) never seen before on some metrics. Our analysis of cycles and other timing techniques suggests this could be the start of a more tumultuous month for USD/JPY, but we need to see 119.60 break convincingly to get me excited about this scenario. Until then we remain begrudgingly bullish.

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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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