Filed Under:
Talking Points

  • JPY sentiment at historical extremes
  • EUR/USD at important cyclical inflection point
  • AUD/USD recovers from key Gann level
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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

PT_DEC_31_body_Picture_3.png, Price & Time: Yen Sentiment Again At ExtremesCharts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD failed near the1.3895 61.8% retracement of the 2009/2010 decline on Friday
  • Our near-term trend bias remains higher in the exchange rate while over 1.3655
  • The 1.3895 level and the 50% retracement of the 2008/2010 decline at 1.3955 are major upside attractions that need to be overcome if the Euro is to embark on a more important move higher
  • An important long-term cycle is in effect over the next few days
  • A move under the 2nd square root relationship of the year’s high at 1.3655 will turn us negative on the Euro
EUR/USD Strategy: Favor the long side while over 1.3655

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3655

1.3765

1.3780

1.3830

*1.3895

Price & Time Analysis: AUD/USD

PT_DEC_31_body_Picture_2.png, Price & Time: Yen Sentiment Again At ExtremesCharts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD found support again on Monday at the 9th square root relationship of the October high near .8860
  • Our near-term trend bias remains lower in the Aussie while below .8965
  • A daily close below .8860 is needed to signal a resumption of the broader downtrend
  • A minor cycle turn window is seen early next week
  • A daily close over the 8th square root relationship of the October high at .8965 would turn us positive on the exchange rate
AUD/USD Strategy: Like the long side on a move through .8965.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

AUD/USD

.8780

*.8860

.8935

*.8960

.9035

Focus Chart of the Day: USD/JPY

PT_DEC_31_body_Picture_1.png, Price & Time: Yen Sentiment Again At ExtremesThe Daily Sentiment Index (DSI) in the Yen fell to just 7% bulls on Friday. Historically such low levels of sentiment have been a reliable precursor to corrections in USD/JPY. Interestingly at the same time this extreme in sentiment is occurring the exchange rate is close to important long-term resistance in the form of the 61.8% retracement of 2007/2011 decline near 105.60. The missing ingredient for a correction is cyclicality, though a case could be made for a Gann turn window here if one uses the late October low (45 trading days from 10/25 was yesterday). A Gann angle line related to the 2011 low is at 103.90 and we are using this as a key near-term support level. If the exchange rate cannot get through 105.60 over the next few days and falls below 103.90 we will turn much more negative on USD/JPY.

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