Price & Time: Downside Break in the Euro Before Payrolls?

Talking Points

• USD/JPY stalls at near key Gann angle line
• AUD/USD recover sharply from the mid-channel
• EUR/USD nearing year-to-date low

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/JPY traded at its highest level in three weeks this morning before stalling out around the 2x1 Gann angle line of the 2014 high
• Our near-term trend bias is positive while above 118.40
• A move through 120.85 is needed to signal the start of a more meaningful push higher
• The next turn window is eyed around the end of the week
• A close below 118.40 would turn us negative on USD/JPY

USD/JPY Strategy: Like holding only reduced longs above 118.40.

Price & Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• GBP/USD failed last week at the 38% retracement of the September to January decline
• Our near-term trend bias is negative while below 1.5550
• A move below 1.5300 is needed to confirm that the broader downtrend is beginning to re-emerge
• An important turn window is seen around the first part of next week
• A close back over 1.5550 would turn us positive on the pound

GBP/USD Strategy: Looking to sell on strength against 1.5550.

Focus Chart of the Day: EUR/USD

EUR/USD has turned nicely lower from the cyclical turn window we highlighted last month (Read HERE). Late last week the single currency did record a new low close for the year which is a strong sign that the broader downtrend is indeed starting to reassert itself. Attention now is obviously on the year’s absolute low just under 1.1100. Gann often said that the most important time for a market is when it tests old highs and lows so we should learn a lot about the exchange rate in upcoming sessions. An easy break of the 1.1100 area would confirm the action seen late last week and set the stage for another meaningful extension lower in the euro in the weeks ahead. Likewise a failure to easily crack 1.1100 would be an interesting change in behavior. However, we would really need to see strength back over 1.1300 to signal that any sort of reversal is actually taking shape.

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

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.

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX