Filed Under:
Talking Points

  • EUR/USD nearing important cycle turn window
  • XAU/USD trades to 5-month low
  • USD/JPY sentiment at historical extremes
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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_DEC_3_body_Picture_3.png, Price & Time: USD/JPY Sentiment Getting Ebullient  Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD traded to its highest level since late October on Friday before encountering resistance just ahead of the 61.8% retracement of the October/November decline at 1.3625
  • Our near-term trend bias is positive on the Euro while over 1.3430
  • A push through 1.3625 is needed to force another leg higher
  • An important cycle turn window is seen around the second half of the week
  • Only a daily close below the 6th square root relationship of the year’s low at 1.3430 would turn us negative on the rate
EUR/USD Strategy: Don’t like buying Euros this close to the cycle turn window.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3430

1.3515

1.3575

1.3595

*1.3625

Price & Time Analysis: GOLD

PT_DEC_3_body_Picture_2.png, Price & Time: USD/JPY Sentiment Getting Ebullient  Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD finally broke away from the 5th square root relationship of the August high at 1242 on Monday as the metal traded to its lowest level in five months
  • Our near-term trend bias is lower in Gold while below 1286
  • The 1st square root relationship of the year’s low at 1214 is key support ahead of 1180
  • Some caution is recommended here as a Gann cycle turn window is in effect today
  • Only a daily close over 1286 would turn us positive on XAU/USD
XAU/USD Strategy: Like being square for a few days.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

XAU/USD

*1180

1214

1222

1242

*1286

Focus Chart of the Day: USD/JPY

PT_DEC_3_body_Picture_1.png, Price & Time: USD/JPY Sentiment Getting Ebullient  The Daily Sentiment Index (DSI) in the Yen reached just 7% bulls on Friday. The market is very confident that USD/JPY is headed higher in the near-term. We now have our doubts. When sentiment gets so lopsided it is usually a strong sign that a market has begun to get a little ahead of itself (at least in the short-term). Additionally several short-term cyclical methodologies suggest Monday was the right time for at least a minor peak that could lead to a few days of corrective behavior. The 103.00 to 103.70 area is also full of several key resistance levels including the 161.8% extension of the Sep/Oct decline, the year’s high and a Gann angle line related to the 2007 high - all of which are important enough in their own right to inspire some sort of counter-trend reaction. Of course the counter argument to all this is that exchange rate is breaking out of a multi-month consolidation (i.e. has a lot of “stored energy”) and corrections will be limited and few and far between. We now prefer a buy into weakness strategy, but a clear move through 103.70 would change this.

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