Price & Time: Cycles Indicate April Will Be Significant for the Euro

This daily publication will further explore the idea 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 and cyclical techniques a better understanding of markets and their corresponding movements can be obtained.

Forex Price & Time at a Glance:

EUR/USD:

PriceTime_Feb6_Fibonacci_Cycle_body_Picture_4.png, Price & Time: Cycles Indicate April Will Be Significant for the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD failed last week just above the 1.3690 1x3 Gann line drawn between the 2011 high and last year’s low.
  • Support has since been found near the 1.3490 50% Fibonacci retracement of the same move.
  • Breach of one of these levels now required to prompt the next directional move of significance in the pair.
  • Several cyclical techniques indicate the second half of April will be extremely important for the euro (Also see chart of the day).
  • Price action during this time should have significant influence over the rest of 2013

NZD/USD:

PriceTime_Feb6_Fibonacci_Cycle_body_Picture_3.png, Price & Time: Cycles Indicate April Will Be Significant for the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has meandered around the critical 1x1 Gann line drawn from the 2009 low to the 2011 advance for the better part of 8-months.
  • Pitchfork resistance connecting the 2011 and 2012 lows so far caps but focus remains on key square root progression resistance related to the June low at .8530 and the .8560 78.6% Fibonacci retracement of the 2011 decline.
  • Clear breach of the latter now needed to pave the way for a cleaner move higher.
  • Gann fan support related to the December low comes into play around .8390
  • Weakness below the 61.8% Fibonacci retracement (resistance turned support) from the 2011 high at .8280 on a closing basis really required to shift attention lower.
  • Fibonacci related time relationship between the October 2000 and the March 2009 lows indicates the second half of March should prove important for trading in the Bird.

EUR/GBP:

PriceTime_Feb6_Fibonacci_Cycle_body_Picture_2.png, Price & Time: Cycles Indicate April Will Be Significant for the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/GBP found important support in July just below the 1x2 Gann line drawn from the 2000 low and the 2008 high.
  • Subsequent strength has been impressive with the cross recently overcoming the 1x1 Gann line related to the 2008 high.
  • This development keeps focus higher and the convergence of two Fibonacci retracements related to the 2008 and 2011 highs in the .8800 area should prove to be the next key resistance zone.
  • Gann square progression support in the .8530 zone related to last week’s highs is now critical and weakness below this level would warn a more important move lower is developing.
  • Several cyclical techniques indicate that late last week was significant from a time perspective.
  • Price action in the cross should be monitored closely over the next few days as weakness below .8530 would confirm that a top of significance has been seen and open the door for a much deeper correction in the weeks ahead.
  • Close over .8715 on the other hand will negate the potential cyclical turn and signal a resumption of the uptrend.

Chart of the Day: EUR/USD

PriceTime_Feb6_Fibonacci_Cycle_body_Picture_1.png, Price & Time: Cycles Indicate April Will Be Significant for the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

A variety of cyclical techniques suggest the second half of April will be significant for the euro. A key component of geometric market principles is that past highs and lows are interrelated and will greatly influence future market cycles. What makes the second half of April particularly interesting is that it marks a key Fibonacci relationship in time between the 2000 all-time low and the 2008 all-time high. This advance lasted about 93 months and 61.8% of this advance will be this coming March. Using a day count we can further drill down this window to the latter part of the month. What makes this time window particularly compelling is that a related historical Fibonacci relationship already seems to exist as evidenced by the important cyclical low recorded in September 2003 (see red ellipse on chart) which coincided with the 61.8% Fibonacci time retracement as measured from the 2008 high back to the 2000 low.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

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