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Price & Time: European Powder Keg?

Price & Time: European Powder Keg?

Kristian Kerr, Sr. Currency Strategist

Talking Points

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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 has traded steadily higher since finding support near a key Gann level in the 118.40 area last week
  • However, our near-term trend bias is negative while below 120.60
  • Weakness under 119.50 is needed to re-instill downside momentum into the exchange rate
  • A minor turn window is eyed on Thursday
  • A close over the 61.8% retracement of the March range at 120.60 would turn us positive on USD/JPY

USD/JPY Strategy: Square.

InstrumentSupport 2 Support 1SpotResistance 1Resistance 2
USD/JPY*119.50119.80120.20120.30*120.60

Price & Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has come under modest pressure after repeated failures late last month at the 38% retracement of the February-March decline
  • Our near-term trend bias is lower in Cable while below 1.5000
  • A close below 1.4760 is needed to confirm that a new leg lower in the pound is underway
  • A very minor turn window is eyed later this week
  • A close over 1.5000 would turn us positive on GBP/USD

GBP/USD Strategy: Like the short side while under 1.5000.

InstrumentSupport 2 Support 1SpotResistance 1Resistance 2
GBP/USD1.4635*1.47601.47651.4875*1.5000

Focus Chart of the Day: EUR/USD

Surveying the FX landscape this morning things looks a bit tricky (or more tricky than usual). We are coming off the end of the 1st quarter and the movements/flows that entails and following it up with a very illiquid few days as most of Europe is about to go on a 4-day weekend for Good Friday and Easter. Throw into the mix a major data event like US employment figures with the continuous overhang of Greece and we have quite the potential powder keg. With respect to EUR/USD we are of the view that as long as the exchange rate sits above the 61.8% and 78.6% retracements of the March range around 1.0685-1.0585 the door remains ajar to a further correction higher – potentially north of 1.1040. Traction under 1.0585 wouldn’t put the downtrend completely into the “free and clear”, but it would be a pretty clear negative development that further sets the stage for a broader downside resumption.

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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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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