Price & Time: Key Turn Window Upcoming for Gold & Stocks

DailyFX

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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Foreign Exchange Price & Time at a Glance:

EUR/USD:

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PT_won_body_Picture_4.png, Price & Time: Key Turn Window Upcoming for Gold & Stocks

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/USD probed above the 1.3385 3x1 Gann angle line of the year-to-date high on Tuesday to trade to its highest level since late February

-Our bias is higher in the euro, but caution is advised here as an important cycle turn window is in effect this week that could lead to a material shift in trend

-The 6th square root progression of the year-to-date low at 1.3430 is key resistance with a close above required to reduce concerns of a top

-The 1.3315 area is immediate support

-However, only weakness below the 1x1 Gann angle line of the year-to-date low in the 1.3290 area would indicate that a turn is indeed underway

Strategy: Minimal long positions favored here in the euro with an important cycle turn window calling for a possible top this week. Under 1.3290 will get us looking short.

AUD/USD:

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PT_won_body_Picture_3.png, Price & Time: Key Turn Window Upcoming for Gold & Stocks

Charts Created using Marketscope – Prepared by Kristian Kerr

-AUD/USD rebounded last week from its multi week slide to test the 4th square roo progression of the year-to-date low in the .9670 area

-Renewed weakness from there back below the .9485 2nd square root progression of last week’s low has shifted our bias back to negative

-Key support is now seen between .9390 and .9425 with weakness below needed to signal a downside resumption

-The short-term cycles are a bit muddled, but weakness is slightly favored over the next couple of days

-A close over .9670 is needed to undermine the negative technical structure and shift our bias to positive

Strategy: Short positions favored while under .9670.

XAU/USD:

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PT_won_body_Picture_2.png, Price & Time: Key Turn Window Upcoming for Gold & Stocks

Charts Created using Marketscope – Prepared by Kristian Kerr

-XAU/USD continues to meander around the 2nd square root progression of the year-to-date low in the 1395 area

-Our bias remains negative in the metal with attention still on the 78.6% retracement of the April to May range in the 1358 area

-Below this level exposes 1325 ahead of 1285

-A long-term cycle turn window at the end of the week suggests the metal is nearing an important inflection point that should lead to an important shift in trend (probably a low)

-The 3rd square root progression of the year-to-date low at 1432 is key resistance and only strength above levels suggest the start of a more signficnant move higher in Gold

Strategy: Looking for a final move lower in Gold into the turn window. Ideally a turn would materialize from somewhere between 1325 and 1285.

Focus Chart of the Day: S&P 500

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PT_won_body_Picture_1.png, Price & Time: Key Turn Window Upcoming for Gold & Stocks

The undercut of 1605 two weeks ago in the S&P 500 followed by last week’s successful re-test of 1597 keeps the index in a short-term bullish position. With the long-term cycles calling for an important cycle turn between June 20 – 25, further strength into this window is now the favored scenario (with a top of some importance expected to follow). Ideally the index will trade as high as 1687 during this time to re-test last month’s high, but this is in no way guaranteed. Unexpected weakness below 1597 over the next few days would ‘flip the script’ and increase the likelihood of a low next week. This scenario is not favored at the moment.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Looking for a way to pinpoint sentiment extremes in the SPX 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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