Unfamiliar with Gann Square Root Relationships? Learn more about them here.
Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: EUR/USD
EUR/USD Strategy: We like the short side while below 1.3710.
Price & Time Analysis: GOLD
XAU/USD Strategy: Like only small longs while over 1229.
Focus Chart of the Day: USD/JPY
We noted in yesterday's piece the importance of the end of the week for the S&P 500 from a time cycle perspective. Whether the pro-risk "QE trade" has one more leg in it or not likely depends on what materializes in the aftermath of today's US employment data. Given the high correlation of USD/JPY to equities over the past year we obviously expect the exchange rate to be similarly influenced. We should note, however, that USD/JPY also has an important longer-term cycle turn window of its own this week which increases our conviction that we are at an important inflection point in terms of time for global markets as a whole. As for USD/JPY, the reversal from the 100.80 200% extension of the mid-January advance earlier in the week looks like a potential low of importance. Continued strength next week would further confirm this notion. With NFPs on the horizon we can't rule out a spike lower (though it seems unlikely), but only weakness AFTER TODAY below 100.80 (or whatever is this week's low) would signal that a much deeper decline is likely over the next few months.
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