News Column

Price & Time: About to Throw in the Towel?

May 20, 2014

Kristian Kerr

Talking Points

  • EUR/USD rebounds from key Gann level
  • NZD/USD at risk of sharper fall?
  • USD/JPY sits atop a major price inflection point



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    Foreign Exchange Price & Time at a Glance:



    Price & Time Analysis: EUR/USD

    Price & Time: About to Throw in the Towel?



  • EUR/USD fell to its lowest level since late February before rebounding from just ahead of the 3rd square root relationship of the year's high at 1.3640
  • Our near-term trend bias is lower in the Euro while below 1.3875
  • A move under 1.3640 is needed to signal the start of the next meaningful leg lower in the Euro
  • Minor cycle turn windows are seen today and Friday
  • Only strength back through the 1st square root relationship of the year's high at 1.3875 would shift the near-term trend bias positive



    EUR/USD Strategy: Like the short side while below 1.3875.



    Instrument

    Support 2

    Support 1

    Spot

    Resistance 1

    Resistance 2

    EUR/USD

    *1.3640

    1.3670

    1.3700

    1.3755

    1.3825



    Price & Time Analysis: NZD/USD

    Price & Time: About to Throw in the Towel?





  • NZD/USD has come under steady downside pressure since failing early in the month at the 8th square root relationship of the year's low at .8770
  • Our near-term trend bias is lower in the Bird while below .8695
  • Interim support is seen at .8555, but the next big downside pivot looks to be around .8515
  • A minor cycle turn window is seen around the end of the week
  • Only a move back through .8695 would turn us positive on the Kiwi



    NZD/USD Strategy: Like the short side while below .8695.



    Instrument

    Support 2

    Support 1

    Spot

    Resistance 1

    Resistance 2

    NZD/USD

    *.8515

    .8555

    .8580

    .8650

    *.8695



    Focus Chart of the Day: USD/JPY

    Price & Time: About to Throw in the Towel?

    USD/JPY seems to be at a critical inflection point. On Monday the exchange rate tested and held its 200-day moving average near 101.10. This was the first time since October/November of last year that the widely watched support level had been seen. Back then we were fairly confident that a test of the moving average would lead to an important rebound as it was the first time the 200-day MA had been tested since the major uptrend in USD/JPY had started in 2012. We have found that first time tests of the 200-day MA in major uptrends usually prove successful. This time around we are far from confident about any sort of meaningful rebound - in fact we fear the opposite. Long USD/JPY remains one of the favored macro themes at the institutional level. With the exchange rate having effectively gone nowhere over the past year (while other pro-risk markets like the SPX have gone gangbusters) there is likely a lot of "stale" positioning among this market segment. We can't help but wonder if a clear break of the 200-day MA over the next few days will be the technical trigger that forces a meaningful washout after a long period of going nowhere.







    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










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    Source: DailyFx


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