Price & Time: How Long Can the Consolidation Continue?

DailyFX

Talking Points

  • Kiwi respecting Gann levels on both sides
  • EUR/USD in consolidation mode
  • GBP/USD stalls again at Gann resistance

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Focus Chart of the Day: NZD/USD

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pt_nx_body_Picture_4.png, Price & Time: How Long Can the Consolidation Continue?

In our Tuesday commentary we wondered whether the Kiwi had peaked a little early as a cycle turn window was approaching around the middle of the week. Follow through weakness on Wednesday below the 2nd square root progression of last week’s high was further confirmation of a top. However, the Bird was not able to breach the 3x1 Gann angle line of the year’s high around .8220 leaving a possible low during the turn window on the daily chart. A move in the days ahead below .8220 is needed to fully negate the possibility (albeit remote) of cyclical inversion and pave the way for a deeper correction towards attractions at .8115 and below. While not our favored scenario, a close over .8375 would confirm a meaningful low.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

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Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD continues to consolidate in a sideways to lower range below the 7th square root progression of the year’s low at 1.3545
  • Above the1st square root progression of the September high at 1.3445 our near-term trend bias will remain positive on the Euro
  • The 1.3545 remains a clear near-term pivot with traction above needed to trigger and advance towards upside attractions at 1.3600 and 1.3670
  • The first half of next week is a medium-term cycle turn window
  • Only weakness below 1.3335 on a daily close basis will turn the chart more clearly negative

EUR/USD Strategy: Like the long side while over 1.3445.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

1.3335

*1.3445

1.3505

*1.3545

1.3600

Price & Time Analysis: GBP/USD

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Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD re-tested the 11th square root progression of the year’s low at 1.6135 this morning before coming off
  • Our near-term trend bias remains higher in Cable while a convergence of multiple Gann levels in the 1.5960 area
  • The 1.6135 progression level and the 1.6170 88.6% retracement of the year’s range are now clear upside pivot levels with strength above needed to signal the start of another leg higher
  • A very minor cycle turn window is seen today
  • A daily close below1.5960 would warn that Sterling has peaked ahead of schedule

GBP/USD Strategy: Like the long side whilst over 1.5960.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.5960

1.6015

1.6085

*1.6135

1.6170

Price & Time Analysis: S&P 500

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pt_nx_body_Picture_1.png, Price & Time: How Long Can the Consolidation Continue?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • S&P 500 has come under steady downside pressure since failing last week at Fibonacci projection resistance at 1735
  • Our near-term trend bias is higher in the index while above the 50% retracement level of the August to September advance at 1680
  • The August high of 1710 is important resistance with a close over this level needed to confirm a resumption of the underlying uptrend
  • Minor cycle turn windows are seen at the beginning and end of next week
  • A daily close below 1680 would warn that a more aggressive correction is occurring

S&P 500 Strategy: Like the long side while above 1680.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

S&P 500

1666

*1280

1692

*1710

1735

--- 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 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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