Filed Under:
Talking Points

  • Euro fails shy of key long-term retracement
  • NZD/USD closing in on key support
  • Important timing seen in 1Q14 for the S&P 500
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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_DEC_19_body_Picture_3.png, Price & Time: How Important Was Yesterday's Reversal in the Euro?  Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD traded to its highest level in a month and a half on Wednesday before reversing sharply
  • Our near-term trend bias is positive on the exchange rate while above the 2nd square root relationship of the year’s high at 1.3595
  • The 1.3830 61.8% retracement of the 2011 to 2012 decline remains a key medium-term pivot with strength above required to set off a more important move higher
  • The end of the month is the next important cycle turn window
  • Only a daily close below 1.3595 would turn us negative on the Euro
EUR/USD Strategy: Favor the long side while over 1.3595

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3595

1.3655

1.3670

1.3765

*1.3830

Price & Time Analysis: NZD/USD

PT_DEC_19_body_Picture_2.png, Price & Time: How Important Was Yesterday's Reversal in the Euro?  Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD failed last week at the 50% retracement of the October/November decline near .8310
  • Our near-term trend bias is lower in the Kiwi while below .8310
  • The 4th square root relationship of the October high at .8180 is interim support ahead of a key downside pivot at .8100
  • A medium-term cycle turn window is seen early next week
  • Traction over .8310 is needed to turn us positive on the Kiwi
NZD/USD Strategy: Favor the short side while under .8310.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

NZD/USD

0.8100

0.8180

0.8180

0.8215

*0.8310

Focus Chart of the Day: S&P 500

PT_DEC_19_body_Picture_1.png, Price & Time: How Important Was Yesterday's Reversal in the Euro?  A so called “Dovish taper” has lit a fire under US equities putting the S&P 500 close to new all-time highs this morning. Looking out a few months the cyclical picture for equities is a messy one. There is loads of important timing throughout the 1st quarter of 2014 and with sentiment as measured by the Daily Sentiment Index and Investors Intelligence at or near all-time highs of optimism we continue to favor some sort of important peak forming during this time. It does not necessarily have to be “the high”, but just a reminder that two-way risk does exist in the market. For the moment, the end of January and the middle of March look the most important from a medium-term cyclical perspective. A host of long-term resistance levels related to the October 2007 high and the March 2009 low between 1820 and 1875 suggest the zone will be an important potential inflection point. However, strength through the upper bound of this resistance area would risk a parabolic blow off.

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