Filed Under:
Talking Points

  • Euro lacking conviction ahead of next week important cycle turn window
  • AUD/USD rebounds off key Gann level
  • S&P 500 at key long-term resistance zone
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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_DEC_24_body_Picture_3.png, Price & Time: Risk Markets Testing Key Levels Going Into the Holidays  Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has come under modest pressure since last week’s failure at 1.3800
  • Our near-term trend bias remains positive on the Euro while over the 2nd square root relationship of the year’s high at 1.3595
  • The 61.8% retracement of the 2011/2012 decline at 1.3830 remains critical resistance with traction above required to inspire the next meaningful push higher in the rate
  • A cycle turn window of importance is seen next week
  • 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

1.3680

1.3710

*1.3830

Price & Time Analysis: AUD/USD

PT_DEC_24_body_Picture_2.png, Price & Time: Risk Markets Testing Key Levels Going Into the Holidays  Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD closed at its lowest level since August of 2010 last week before rebounding from the 9th square root relationship of the October high at .8860
  • Our near-term trend bias is lower in the Aussie while under .9005
  • The .8860 level is now a key near-term pivot with weakness below needed to confirm a resumption of the broader decline
  • A medium-term cycle turn window is in effect over the next few days
  • A daily close over the 2nd square root relationship of the year’s low at .9005 would turn us positive on the rate
AUD/USD Strategy: Favor the short side while under .9005.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

*0.8860

0.8910

0.8925

0.8965

*0.9060

Focus Chart of the Day: S&P 500

PT_DEC_24_body_Picture_1.png, Price & Time: Risk Markets Testing Key Levels Going Into the Holidays  As we have mentioned in various notes the next 50 points or so in the S&P 500 is a critical long-term resistance area. Using the FXCM fair value instrument, the 127% extension of the 2007/2009 decline is at 1823 while the 161.8% extension of the 2011 range comes in around 1864. Gann points related to the 2009 low are at 1834 and 1876. All of these levels in their own right look important enough to prompt some sort of counter-trend attempt, but given their relative close proximity (on a longer-term basis) it looks like a key zone from which to expect some sort of material corrective action. This seems to be even more the case when one factors in the historical extreme positive sentiment being exhibited of late towards the asset class as well as the increased use of leverage being used to speculate in equities (NYSE margin debt now around 2.5% of GDP). Of course a “material correction” is by no means guaranteed and we would prefer to see the market respond negatively to this resistance area before positioning too aggressively on the short side. A multi-day close over 1876 risks a parabolic push higher.

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