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Price & Time: The Price Time Relationship in the Dow With the 1973 High

Kristian Kerr

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:


XAU/USD:

PT_1973_body_Picture_4.png, Price & Time: The Price Time Relationship in the Dow With the 1973 High

Charts Created using Marketscope – Prepared by Kristian Kerr


-XAU/USD came under further pressure over the past couple of days and traded to its lowest level in 3 weeks on Wednesday

-Out bias is negative with focus on the 1562 88.6% retracement of the late February advance

-Weakness below this level is needed to setup a more important decline towards key support in the 1545/50 area

-Very near-term focused cycle turn window seen tomorrow and early next week, but broader cycles look negative for another few weeks

-A convergence of several Gann levels and the 61.8% retracement of the most recent decline in the 1595/97 area is key resistance and strength over this needed to turn us positive on Gold


Strategy: Want to get short, but prefer doing so on strength. Looking to sell against 1595 with a stop just over 1608.



GBP/USD:

PT_1973_body_Picture_3.png, Price & Time: The Price Time Relationship in the Dow With the 1973 High

Charts Created using Marketscope – Prepared by Kristian Kerr


-GBP/USD failed again on Tuesday at the 1.5250 50% retracement of the 2009 range

-Subsequent weakness below 1.5090 has turned us negative, but a decline under the 1.5045 50% retracement of the March range needed to confirm our bias and signal the resumption of the broader downtrend

-A Gann cycle turn window related to the year-to-date high remains in effect for another day or so

-A square root progression related to the year’s high in the 1.5200 area is immediate resistance

-However, clear strength over 1.5250 needed to shift bias in Cable to positive.


Strategy: Cycle turn we were looking for seems to have come a day early. Going to try selling Cable around 1.5195 with a stop just over 1.5260. With short cycles positive here for another day or two there is some risk we try to make a final high, but risk/rekward around 1.5200 is good.



EUR/SEK:

PT_1973_body_Picture_2.png, Price & Time: The Price Time Relationship in the Dow With the 1973 High

Charts Created using Marketscope – Prepared by Kristian Kerr


-EUR/SEK rebounded sharply on Wednesday from just above the 78.6% retracement of the March range in the 8.2940 area

-While the cross is below the 1x1 Gann angle line from the year-to-date high in the 8.4100 area our bias is lower

-The 8.2940 level remains a key near-term pivot with weakness below this level needed to setup further downside

-Short-term focused time cycles suggest tomorrow and early next week are possible turn windows

-Only over 8.4100 undermines the immediate negative tone in the cross


Strategy: Looking to sell Euro/Stokkie at 8.3700 with a stop just over 8.4250.


Focus Chart of the Day: Dow 30



PT_1973_body_Picture_1.png, Price & Time: The Price Time Relationship in the Dow With the 1973 High

Last month we flagged a potential vibration (price/time relationship) in the Dow between price and the time elapsed since the 1973 high in the index (Hat Tip PSP). As we noted in March, this top proved to be the high price for the decade in the Dow and led to a vicious bear market culminating in the 1974 low (which still holds significance for Gann theorists to this day). We bring all this up again because with the Dow trading near 14,692 at the same time the index is 14,692 calendar days from the January 1973 high there is a good chance this relationship could influence the market over the next few days – if it isn’t already (Tuesday’s Dow high was 14,687). Under 14350 really need to signal that a more important top is in place.


--- 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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