Talking Points
- Important cycle confluence in the pound next week
- EUR/USD falls to 11-year low
- S&P 500 stalls at key resistance
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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 fell to its lowest level since September of 2003 this morning before rebounding ahead of the 1.618% projection of the early February decline near 1.1020
- Our near-term trend bias is negative while below 1.1210
- A close under 1.1020 should promp the next leg lower in the rate
- A very minor turn window is eyed today
- A close above 1.1210 would turn us positive on the euro
EUR/USD Strategy: Like the short side while below 1.1210
| Instrument | Support 2 | Support 1 | Spot | Resistance 1 | Resistance 2 |
|---|---|---|---|---|---|
| EUR/USD | 1.1000 | *1.1020 | 1.1050 | 1.1095 | *1.1210 |
Price & Time Analysis: S&P 500
Charts Created using Marketscope – Prepared by Kristian Kerr
- S&P 500 has come under steady but modest downside pressure since last week’s cyclical turn window
- Our near-term trend bias is positive, however, while above 2080
- A puch through 2125 is needed to signal a resumtion of the broader trend and set the stage for a more serious advance
- A minor turn window is eyed early next week
- A close below 2080 would turn us negative on the index
S&P 500 Strategy: Like the long side while 2080 holds.
| Instrument | Support 2 | Support 1 | Spot | Resistance 1 | Resistance 2 |
|---|---|---|---|---|---|
| S&P 500 | 2065 | *2080 | 2100 | 2108 | *2125 |
Focus Chart of the Day: GBP/USD
One of the many timing tools advocated by Gann in his writings was the use and awareness of anniversary dates - particularly the historical dates of major tops and bottoms. Over the years it has proven to be a useful concept as I have witnessed some interesting moves on or around important anniversaries. Late October in the S&P 500 comes to mind. The big problem I have encountered with the use of anniversary dates is determining which ones will be important and which ones will not. This is where the use of other timing tools and cyclical methodologies can really help. I am a big proponent of cyclical convergence. The more seemingly unrelated methods I can find converging on a particular period the better. This brings me to why I am writing this piece today. The all-time high in GBP/USD recorded during the current “free float” era was on March 9, 1972. The period from March 9, 1972 to March 9, 2015 is 15,702 calendar days. This is precisely five “Pi cycles” of 8.6 years (3,141 days). An interesting convergence of unrelated methodologies. Some other short-term based Fibonacci related methods also align up with next week as well. There is clearly some nice potential for next week to be significant for the pound from a timing perspective. I had been hoping for a rally into this period as it would have set up a nice reversal in the direction of the primary trend. The steady weakness over the past few days suggests that barring some sort of NFP bombshell this is probably not to be. Focus now is on a potential secondary low if the rate gets closer to 1.5100 or even a possible acceleration in the direction of the trend.
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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
