Price & Time: Next Couple of Days Are Important For AUD

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.

Foreign Exchange Price & Time at a Glance:

USD/JPY:

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PT_AUD_continuation_body_Picture_4.png, Price & Time: Next Couple of Days Are Important For AUD

Charts Created using Marketscope – Prepared by Kristian Kerr

-USD/JPY gapped higher on the open to trade at its highest level since May of 2009 on Monday

-Our bias remains higher in the exchange rate with immediate focus now on the 1x3 Gann angle line from the 2011 low and the 161.8% extension of the March decline in the 99.00/30 area

-Strength above this key resistance zone needed to setup the next push higher

-A Pi cycle relationship over the next couple of days with the 2011 low warrants some caution with the pair near key resistance levels as the market is susceptible to a turn of some sort during this time

-A convergence of Gann and Fibonacci levels in the 97.25/50 area is key support and only a clear break below these levels undermines the positive technical tone in the pair

Strategy: Still long half a unit from 94.15. Raising our stop from 95.30 to just under 97.20.

NZD/USD:

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PT_AUD_continuation_body_Picture_3.png, Price & Time: Next Couple of Days Are Important For AUD

Charts Created using Marketscope – Prepared by Kristian Kerr

-NZD/USD pushed through key Gann resistance near .8435 on Monday to trade to its highest level since late February

-We remain positive on the Kiwi, but strength over a convergence of Gann and Andrews lines in the .8480 area needed to trigger a more important move higher

-Time cycle analysis suggests the next couple of days are a medium-term turn window where a change in trend could occur

-The .8435 area is now immediate support

-However, only weakness under the 61.8% retracement of the year-to-date range in the .8400 area turns us negative on the Bird

Strategy: Frustrating trading in the Kiwi. Missed getting long last week by a few pips. Want to wait and see if weakness materializes during this cycle turn window before starting our next operation.

USD/CHF:

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PT_AUD_continuation_body_Picture_2.png, Price & Time: Next Couple of Days Are Important For AUD

Charts Created using Marketscope – Prepared by Kristian Kerr

-USD/CHF has come under steady pressure over the past few days and broken several key support levels including the .9370 2nd square root progression of the year-to-date high

-Our bias is now lower in the exchange rate with focus on the 50% retracement of the year’s range at .9295

-Traction below this level needed to signal that a more important decline is indeed underway

-Near-term focused time cycle analysis indicates Tuesday and Friday could see a minor turn

-The .9370 Gann level is now resistance, but strength over the 9440 50% retracement of the most recent decline needed to turn us positive

Strategy: Took a 40 pip loss on our long from 9440. Now looking to get short at .9405 with a stop just over .9445.

Focus Chart of the Day: AUD/USD

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PT_AUD_continuation_body_Picture_1.png, Price & Time: Next Couple of Days Are Important For AUD

We noted last week that April 3rd had a Fibonacci time relationship with the January high and the March low and that a change in trend was more probable at this time. After testing the 78.6% retracement of the year-to-date range near 1.0500 the Aussie did turn and has come under pressure over the past few days. So just how important is this price/time harmonic? The quick answer is we are not sure yet. A problem with Fibonacci related turn windows is they do a good job at pinpointing turns in the market, but are lousy at determining duration. The next couple of days look significant from a time perspective as weakness below 1.0350 into the second half of the week would be further evidence of a more important down cycle materializing. On the other hand, more strength over a confluence of several key Gann and Fibonacci levels near 1.0445 would signal the decline was likely just a minor correction before renewed gains.

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

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

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