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EUR/USD & GBP/USD testing a major support levels. USD/JPY showing signs of life, but needs to overcome 99.65 to signal a broader upside resumption.

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

PT_euro_30_body_Picture_4.png, Price & Time: Why 1.3220 is Important for the EuroCharts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY found support on Wednesday at the 61.8% retracement of the April to May advance in the 96.80 area
  • Our near-term trend bias remains higher in the rate while above 96.80
  • The 5th square root progression of the year’s high at 98.65 is immediate resistance, but the major overhead sticking point that needs to be overcome to prolong the rally is a Gann confluence around 99.45/65
  • A potential cycle turn window is seen early next week
  • A close below 96.80 would turn the technical outlook much more negative
USD/JPY Strategy: Like the long side while over 96.80

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*96.80

97.55

98.20

98.65

*99.45

Price & Time Analysis: GBP/USD

PT_euro_30_body_Picture_3.png, Price & Time: Why 1.3220 is Important for the EuroCharts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has come under steady pressure since failing near the 100% projection of the July range in the 1.5720 area
  • Our near-term trend bias is still higher, but a close below important Gann support at 1.5485 will change that
  • The 50% retracement of the year-to-date range in the 1.5575 area is a natural upside pivot and traction over this level is required signal an upside resumption
  • Minor turn windows are seen on Monday and Thursday
  • A close below the 1x1 Gann angle line of the year’s high will turn us negative on Cable
GBP/USD Strategy: Square here. Looking to sell a close below 1.5485.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

1.5410

*1.5485

1.5495

1.5540

*1.5575

Price & Time Analysis: S&P 500

PT_euro_30_body_Picture_2.png, Price & Time: Why 1.3220 is Important for the EuroCharts Created using Marketscope – Prepared by Kristian Kerr

  • S&P 500 traded to its lowest level in over a month and half on Wednesday before finding support at the 2nd square root progression of the all-time high at 1627
  • While below 1673 our near-term trend bias will remain lower in the index
  • The 1627 area is now a potentially important downside pivot and close below this level is needed to force a more important decline
  • Wednesday was a medium-term turn window
  • A confluence of several Gann levels in the 1673 area needs to be overcome to alleviate the immediate downside pressure, but only over 1710 confirms a broader upside resumption
S&P 500 Strategy: Like the short side while under 1673.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

S&P 500

1616

*1627

1642

1657

*1673

Focus Chart of the Day: EUR/USD

PT_euro_30_body_Picture_1.png, Price & Time: Why 1.3220 is Important for the EuroThe 1.3220 area is important for the Euro as it is the 2nd square root progression of the month’s 1.3450 high. A close below this level would be very negative for the single currency and open the way for more important correction in the days and weeks ahead. A successful hold of this support zone would be very positive and suggest the move off the 1.3450 high over the past couple of weeks was just a natural correction within the burgeoning uptrend. Interestingly this key support level is being tested during an important cycle turn window as the next couple of days have a Fibonacci time relationship with the 2009 and 2011 peaks. This probably favors an upside resumption, but we would be remiss if we did not mention that occasionally such turn windows can lead to downside accelerations. A close below 1.3220 especially on a weekly basis would bring this scenario very much into play.

--- 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 the Euro 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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