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Price & Time: USD & Stocks Losing Luster

Kristian Kerr

Talking Points

  • S&P 500 nearing critical support level
  • EUR/USD has important cycle turn window later this week
  • USD/CAD threatening major downside break


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Foreign Exchange Price & Time at a Glance:


Price & Time Analysis: EUR/USD

PT_APR_8_body_Picture_3.png, Price & Time: USD & Stocks Losing Luster

Charts Created using Marketscope – Prepared by Kristian Kerr


  • EUR/USD closed back over the 2nd square root relationship of the year’s high near 1.3730 on Monday
  • Our near-term trend bias is lower in the Euro while below 1.3820
  • Weakness under the 127% extension of the late March/early April recovery at 1.3670 needs to be breached to signal a resumption of the broader decline
  • A key cycle turn window is seen later this week
  • A move over 1.3820 would turn us positive on the Euro


EUR/USD Strategy: The turn window this week looks important for the Euro. Like only reduced short positions in the exchange rate while below 1.3820.


Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

EUR/USD

*1.3670

1.3730

1.3760

*1.3820

1.3875


Price & Time Analysis: USD/CAD


PT_APR_8_body_Picture_2.png, Price & Time: USD & Stocks Losing Luster

Charts Created using Marketscope – Prepared by Kristian Kerr


  • USD/CAD broke under the 3rd square root relationship of the year’s high at 1.0960 today to trade at its lowest level since mid-February
  • Our near-term trend bias is lower in Funds while under 1.1015
  • The February low at 1.0910 is a major downside pivot with weakness below required to confirm that a broader turn is taking shape in the exchange rate
  • An important cycle turn window is seen next week
  • Strength back over 1.1015 would turn us positive on USD/CAD


USD/CAD Strategy: We like the short side while below 1.1015.


Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/CAD

1.0860

*1.0910

1.0925

1.0960

*1.1015


Focus Chart of the Day: S&P 500



PT_APR_8_body_Picture_1.png, Price & Time: USD & Stocks Losing Luster

The S&P 500 failed to get above 1900. This would have, in our view, eliminated much of the risk of a false upside break. The weakness over the past few days is obviously very concerning, but from a technical & cyclical point of view 1830 remains the key level to watch. The middle of March was significant for the index as a variety of different cyclical relationships converged during this time. The March low in the index made near 1830 is thus very significant and should not be breached if the S&P 500 is still in the midst of a strong uptrend. Any weakness under 1830 in the days ahead would remove this “time support” element in the index and set up a potentially much more important decline for equities. Further weakness that holds above 1830 before reversing would be a very positive development for the S&P 500.



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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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