Filed Under:
Talking Points

  • Gold nearing important turn window
  • USD/JPY tests key upside pivot
  • GBP/USD near-term trend bias turns negative
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Focus Chart of the Day: GOLD

PT_gold_nears_body_Picture_4.png, Price & Time: Gold Falls Further, but Nearing Key Cyclical Inflection PointGold has come under some further downside pressure this morning with the metal breaking blow key Gann support in the 1260 area to trade to its lowest levels since early July. While the technical outlook for XAU looks rather dire (especially if 1260 is broken on a close basis), our cyclical analysis suggests that bears need to tread with some caution over the next few days as a clear cycle turn window will be in effect over the second half of the week. As a reminder, cycle turn windows are points in time where we believe a change in trend can more easily develop. In addition to 1260, other levels we will be monitoring closely for a reaction during this cyclically significant period include the 1248 2nd square root progression of the year’s low, the 1239 5th square root progression of the August high and the 78.6% retracement of the June to August advance at 1234. Continued weakness into next week under 1234 would warn that a more serious decline is unfolding in the Gold market.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

PT_gold_nears_body_Picture_3.png, Price & Time: Gold Falls Further, but Nearing Key Cyclical Inflection PointCharts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY rebound off the 7th square root progression of the year’s high at 96.60 has gathered pace over the past few days
  • Our near-term trend bias is negative while below the 50% retracement of the September to October decline in the 98.60 area
  • The 97.55 area is a more immediate downside pivot, but traction under 96.60 is really needed to signal the start of a more important distribution phase
  • A minor cycle turn window is in effect today
  • A daily close over 98.60 will shift our trend bias to positive
USD/JPY Strategy: More aggressive traders can look to sell into the 98.60 area. We will look to go long on a daily close over 98.60.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*97.55

98.10

98.45

*98.60

99.05

Price & Time Analysis: GBP/USD

PT_gold_nears_body_Picture_2.png, Price & Time: Gold Falls Further, but Nearing Key Cyclical Inflection PointCharts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has come under fairly steady downside pressure since failing at the start of the month at gann resistance in the 1.6225 area
  • Subsequent weakness below the 2nd square root progression of the month-to-date high at 1.6005 has turned our near-term trend bias to negative in Cable
  • A convergence of the 1x3 Gann angle line of year’s low and the 3rd square root progression of the month’s high in the 1.5875 area is a clear downside attraction
  • Some minor turn windows are seen over the next few days, but the next important turn window looks to be late next week
  • A close over 1.6135 at any time would re-focus attention higher in GBP/USD
GBP/USD Strategy: Like the short side while below 1.6135. Will look to add on strength.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

1.5835

*1.5875

1.5945

1.6005

*1.6135

Price & Time Analysis: NZD/USD

PT_gold_nears_body_Picture_1.png, Price & Time: Gold Falls Further, but Nearing Key Cyclical Inflection PointCharts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has moved steadily higher since finding support last week at .8230 during the cycle turn window
  • Subsequent strength through Gann resistance at .8340 has turned our near-term trend bias to positive in the Kiwi
  • The 9th square root progression of the year’s low at .8450 is a natural attraction/reaction level
  • A minor cycle turn window is seen around mid-week
  • It would take weakness below .8230 to undermine the immediate positve tone in the Bird and re-focus attention lower
NZD/USD Strategy: Like the long side whilst above .8230.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

*0.8230

0.8305

0.8370

0.8395

*0.8450

--- 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

Looking for a way to pinpoint sentiment extremes in real time? Try the Speculative Sentiment Index.

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

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