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Talking Points

  • EUR/USD testing key Fib
  • USD/CAD breaks key resistance
  • USD/JPY break coming?

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Price & Time: The Coiled Spring

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has fallen further this morning to test the 161.8% extension of the June/July advance at 1.3395
  • Our near-term trend bias is lower in the euro while below 1.3545
  • A daily close below 1.3395 area is needed to set off a more material move lower in the rate
  • A very minor cycle turn window is eyed today, but a more important one is expected around the middle of next week
  • A move over 1.3545 would turn us positive on the euro

EUR/USD Strategy: A low next week would not surprise. We like holding only a reduced short position while under 1.3545.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3320

*1.3395

1.3400

1.3455

*1.3545

Price & Time Analysis: USD/CAD

Price & Time: The Coiled Spring

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CAD touched its highest level in over a month on Wednesday
  • Our near-term trend bias is higher in Funds while over 1.0795
  • The measured move of the early July advance near 1.0880 is the next major upside attraction
  • A cycle turn window is eyed next week
  • A move under 1.0795 would turn us negative on USD/CAD

USD/CAD Strategy: Like the long side while over 1.0795.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.0795

1.0825

1.0860

*1.0880

1.0905

Focus Chart of the Day: USD/JPY

Price & Time: The Coiled Spring

The spring is tightly coiled in USD/JPY heading into the key event risk of US GDP and the FOMC later today. For more than five months the exchange rate has been mired in a tight range above 100.75. Will the events later today be the catalyst(s) that prompt a break from this range or will they just lead to more disappointment and continuation of the range? It is very easy to get sucked into the hype surrounding such events. As such we try to tune out as much of it as possible and concentrate on price levels and reactions around them. On the topside key levels look to be 102.25/30 and then 102.85. A daily close over these levels (especially the latter) would be a strong signal that we are indeed getting a regime change and given the compression of the past few months a move higher could happen pretty fast. One potential problem to this scenario is that a lot of the Street seems to be expecting this break as evidenced by the steady rise over the past few days leading into it. A false break higher or the wrong data could force an aggressive unwind. This is not our favored scenario, but we need to be open to it. Under 101.05 would warn something more sinister is developing.

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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.

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