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Price & Time: Negative Cyclical Forces Reassert in the Euro
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 obtained.
Foreign Exchange Price & Time at a Glance:
EUR/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
-EUR/USD has been weak since failing at the start of the month near the 1x3 Gann line from the 2011 high
- Renewed weakness on Thursday below the 1x2 Gann line from the 2011 high in the 1.3370 area keeps focus lower
- The next hurdle for the decline is 1.3290 as it is a Fibonacci confluence of minor retracements and the 61.8% projection of the early February decline from Tuesday’s high
- Below this key level exposes a square root progression at 1.3265 before another Fibonacci cluster just below 1.3200
- Cyclical picture remains negative over the next few days with next time window for a turn not seen until early next week
- Initial resistance seen at the Gann line in the 1.3370 area, but only over 1.3440 pitchfork line compromises the negative cyclical picture
Strategy: The cyclical picture seems clear over the next few days and we like holding short positions. Exchange rate over 1.3440 forces a reassessment.
USD/CAD:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD failed on Tuesday just under the 1x8 Gann fan line from last year’s closing high now at 1.0090
- Subsequent weakness through a convergence of Gann lines near 1.0020 shifts immediate bias lower
- An array of Gann related support in the .9980 area is the next near-term pivot, but weakness under a confluence of several longer-term Gann angles and a pitchfork betwee .9950 and .9940 likely need to signal the start of a more important decline
- Shorter-term cyclical picture is a bit unclear, though next week looks to be an important time window from a medium-term perspective
- Close over 1x8 Gann fan line from last month’s high in the 1.0045 area needed to shift immediate attention to the upside, but over 1.0090 required to spark more important upside move
Strategy: Not the clearest cyclical picture at the moment. Small short positions favored in Funds while below 1.0045, but a clear move through .9940 or 1.0090 on the upside needed to raise conviction on the direction of the next meaningful move.
EUR/SEK:
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/SEK has been generally week since finding resistance just below the 2x1 Gann fan line from the 2009 high
- Weakness over the past few days has seen an important Fibonacci confluence materially give way keeping focus to the downside in the cross
- Support now being found near 8.4300 which is the 100% projection of the December to January decline as measured from last month’s high
- Just below is the 61.8% retracement of the 2012 range in the 8.4000 area which is also key
- Near-term cyclical studies remain negative into early next week with serious counter-trend attempts not expected until then
- The 50% retracement of the 2012 range near 8.4800 now immediate resistance with strength above required to spark downside reprieve
Strategy: Multitude of important support near current levels is a minor cause for concern, but while below 8.4800 and probably even 8.5500 the short side has to be favored in Euro/Stokkie.
Focus Chart of the Day: USD/SEK
We have written that next week is potentially important for a wide variety of currencies from a timing perspective as there is a pi relationship with the big reversal seen in early June of last year. USD/SEK also recorded an important turn at this time and could come under the influence of the cycle. What makes this particular turn window interesting is that it also coincides with a Gann 90 day “death cycle” next week as it will be a little more than 180 trading days (90 x 2) from the June peak. Gann theorized that trends often exhaust around 90 day increments. We will be closely watching USD/Stokkie next week for any signs of exhaustion as a result.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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