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Price & Time: Will Aussie Respect the Confluence?

Price & Time: Will Aussie Respect the Confluence?

Kristian Kerr, Sr. Currency Strategist

Talking Points

  • Price & Time covers key technical themes daily and can be delivered to your inbox each morning by joining the distribution list: Price & Time
  • EUR/USD tests key retracement
  • AUD/USD probes major support zone

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

ChartPrepared by Kristian Kerr

  • EUR/USD has come under fairly steady pressure since failing near the 1.1685 12th square root relationship of the year-to-date low on Monday
  • Our near-term trend bias is higher in the euro while above 1.1375 (closing basis)
  • The 1.1685 area remains immediate resistance ahead of some key Fibonacci attractions around 1.1800
  • A minor turn window is eyed Thursday/Friday
  • A daily close under 1.1375 would turn us negative on EUR/USD, but traction under 1.1325 is really needed to confirm a downside resumption

EUR/USD Strategy: Like the long side while over 1.1375

InstrumentSupport 2 Support 1SpotResistance 1Resistance 2
EUR/USD*1.1325*1.13751.13901.1475*1.1685

Price & Time Analysis: GOLD

ChartPrepared by Kristian Kerr

  • XAU/USD has fallen sharply since failing at the 61.8% retracement of the May - July decline at 1170
  • A close below 1110 will shift out near-term bias to negative in the commodity
  • Minor resistance is seen around 1135, but traction above 1170 is really needed to set off a more important move to the upside
  • Next week looks significant for the metal from a cyclical perspective

XAU/USD Strategy: Like holding long position while above 1110.

InstrumentSupport 2 Support 1SpotResistance 1Resistance 2
XAU/USD*1110111711221135*1170

Focus Chart of the Day: AUD/USD

The commodity currencies seem to be at an inflection point of sorts. We documented yesterday the developments in the Kiwi (read HERE). AUD/USD is also testing crucial support. The zone between .7085 and .7165 marks a nice confluence of the 61.8% retracement of the 2001 – 2011 advance, the 78.6% retracement of the 2008 “Global Financial Crisis” low and 2011 high, the measured move of 2011 to early 2014 decline as well as a trendline connecting the secondary low in 2001 and the 2008 bottom. There is some timing this week as the next few days mark a 138% time relationship of the 2011 and the 2Q14 highs. However, truth be told it is not very compelling as prior timing relationships related to this cycle have had little material impact on spot. However, we should note that some more significant timing pivots are looming over the next few months with November and December looking particularly interesting. As for as gauging AUD/USD in the here and now there is not much to say. The confluence between .7085 and .7165 is a potentially important one and is the sort of price zone that can spawn a meaningful counter-trend reaction. Caution is probably warranted around it, but outside of a glaring divergence on the three week rate of change the market has given little reason to doubt the broader downtrend. Traction over .7200 would start to change things, but for now we’d need to see a close north of .7415 to get more excited about the upside. A close sub .7085 increases the risk a downside acceleration.

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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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