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 obtained.
Foreign Exchange Price & Time at a Glance:
USD/JPY:
Charts Created using Marketscope – Prepared by Kristian Kerr
-USD/JPY continues to consolidate just under the 38% Fibonacci retracement of the 2007 to 2011 decline
- While the dollar holds above the second square root progression from last week’s high in the 92.00 area focus has to remain higher
- A close over the long-term retracement near 94.20 now needed to prompt further push higher towards a Fibonacci extension just above the 95 handle
- Some caution warranted over the next few days as our cyclical analysis suggests the pair is nearing a turn window
- Weakness under 92.00 especially on a closing basis needed to shift attention lower and open the way for a more severe decline
Strategy: While over 92.00 we have to favor the long side, but should the pair fall under this level in the next few days we would strongly contemplate a stop and reverse.
AUD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
- AUD/USD found demand early in the week near the 1.0230 38% Fibonacci retracement of the late 2012 advance, but broader decline remains in force
- Friday’s failure by a convergence of the 38% retracement and 1x1 angle of the year-to-date range in the 1.0370 area keeps focus lower
- Weakness under the longer-term Fibonacci retracement now needed to trigger the next extension lower
- However, cycles indicate the next few days are significant and the potential for a turn of some signficance is high
- Close over the 1.0370 retracement needed to shift bias higher and signal a more important move is underway
Strategy: While under 1.0370 we like being short the Aussie, but keep stops tight. The next few days are key from a cyclical perspective and a reversal in trend is looking possible.
EUR/GBP:
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/GBP has found resistance over the past days at the 78.6% Fibonacci retracement of the early February decline
- Weakness from there has been mild and contained by a longer-term retracement in the .8575 area related to the 2011 to 2012 decline
- Near-term focus is higher, but strength over the cyclically significant year-to-date high near .8715 is really required to undermine this cycle and set up a more important advance