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Price & Time: AUD/USD Correction or Reversal?

Kristian Kerr

Talking Points

  • EUR/USD testing key resistance
  • USD/CAD touches highest level since July
  • AUD/USD rebounds of key support zone


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Foreign Exchange Price & Time at a Glance:


Price & Time Analysis: EUR/USD


PT_NOV_28_body_Picture_3.png, Price & Time: AUD/USD Correction or Reversal?

Charts Created using Marketscope – Prepared by Kristian Kerr


  • EUR/USD probed above the 2nd square root relationship of the year’s high at 1.3595 on Thursday to trade to its highest level in three weeks
  • A daily close over 1.3595 will shift our near-term trend bias to higher
  • Interim support is seen at 1.3540, but weakness under 1.3475 is really needed to signal that a more important decline is developing
  • The middle of next week is a medium-term cycle turn window
  • A daily close over 1.3595 will shift our near-term trend bias positive


EUR/USD Strategy: Focus on long side opportunities on a close over 1.3595.


Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3475

1.3540

1.3590

*1.3595

1.3655




Price & Time Analysis: USD/CAD


PT_NOV_28_body_Picture_2.png, Price & Time: AUD/USD Correction or Reversal?

Charts Created using Marketscope – Prepared by Kristian Kerr


  • USD/CAD closed above the 4th square root relationship of the September low on Wednesday to trade to its highest level since early July
  • Our near-term trend bias is higher in Funds while above 1.0505
  • The 6th square root relationship of the 2Q13 high at 1.0610 is an important upside pivot with traction above exposing the 127% extension of the 2012 range at 1.0665
  • A medium-term cycle turn windown is seen around the 1st half of next week
  • Only a daily close below 1st square root relationship of the year’s high at 1.0505 would turn us negative on USD/CAD


USD/CAD Strategy: Like the long side while over 1.0505



Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

*1.0505

1.0535

1.0575

*1.0610

1.0665




Focus Chart of the Day: AUD/USD



PT_NOV_28_body_Picture_1.png, Price & Time: AUD/USD Correction or Reversal?

AUD/USD has rebounded sharply from just above the key support zone we highlighted on Tuesday. With the .9330 to .9360 area marking a convergence of several key Gann levels including the 7th square root relationship of the October high, the 2x1 Gann angle line of the year’s closing low and the 2nd square root relationship of the year intraday low it is a natural stopping point. Just how important this counter-trend move is will depend on the price action over the next few sessions. If Aussie can gain traction over .9170 on a daily close basis it likely sets up a stronger correction – perhaps back towards the neckline of the Head & Shoulders pattern. A potential hindrance to further upside is the short-term cyclical picture which is not particularly positive on the exchange rate as a minor turn window is seen today. A clear move under .9030 is required to signal that the broader downtrend is resuming.





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--- 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



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




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