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Price & Time: Overnight Volatility In USD/JPY But Key Support Holds

Price & Time: Overnight Volatility In USD/JPY But Key Support Holds

Kristian Kerr, Sr. Currency Strategist

Talking Points

  • USD/JPY stalls at key retracement
  • EUR/USD consolidates below the 20-day moving average
  • GBP/USD threatens break of important Gann level

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD remains in consolidation mode below the 20-day moving average now around 1.1380
  • Our near-term trend bias is positive while above 1.1210
  • A move over 1.1380 is needed to reinstill upside momentum in the rate and trigger a more meaningful push higher
  • A minor turn window is eyed today
  • A close 1.1210 would turn us negative on the euro

EUR/USD Strategy: Like holding long positions while above 1.1210.

InstrumentSupport 2 Support 1SpotResistance 1Resistance 2
EUR/USD*1.12101.12601.13351.1350*1.1380

Price & Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD is testing the 3rd square root relationship of the year-to-date low near 1.5330 this morning
  • Our near-term trend bias is positive while above 1.5195
  • Traction over 1.5330 is needed to confirm that a new leg higher is underway in the pound
  • A medium-term window is seen around the middle of next week
  • A close below 1.5195 would turn us negative on Cable

GBP/USD Strategy: Like the long side while above 1.5195.

InstrumentSupport 2 Support 1SpotResistance 1Resistance 2
GBP/USD*1.51951.52601.5330*1.53301.5375

Focus Chart of the Day: USD/JPY

There was some wild price action in USD/JPY overnight as the exchange rate fell almost 2 big figures on the back of comments from the BOJ that they see consumer sentiment getting hurt by a further decline in the yen. Interestingly the high yesterday came right at the 120.50 78.6% retracement of the December range which is oftentimes a natural stalling point. The decline this morning while aggressive did stop where it needed to as a convergence of various Gann and Fibonacci levels between 118.40/70 held smartly leading to an immediate 100-pip rebound. As we mentioned yesterday, the breakout last week from the multi-month consolidation looks valid and today’s hold of key support seems to further support this view. A push through 120.50/80 is now needed to re-instill upside momentum and confirm the start of a new leg higher in the exchange rate. We do have some concern of a potential false pattern breakout following the violent move overnight, but only weakness under this week’s low at 118.40 would turn this concern into a reality.

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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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