Price & Time: Euro at a Major Cyclical Inflection Point This Week

Talking Points

• 
  Important cycle turn window seen this week in the Euro
  


• 
  USD/JPY nears important long-term retracement
  


• 
  Gold just above key support
  

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

• 
  USD/JPY recorded another multi-year high early on Monday before stalling out just ahead of the 61.8% retracement of the 2007/2011 decline at 105.55
  


• 
  Our near-term trend bias remains higher in the exchange rate while over 103.70
  


• 
  The 101.55 area looks to be the next major important inflection point for the rate
  


• 
  A minor cycle turn window is seen over the next few days
  


• 
  Weakness below 103.70 would turn us negative on USD/JPY
  

USD/JPY Strategy: Favor the long side while over 103.70.

Price & Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• 
  XAU/USD has recovered modestly since finding support at the 1×2 Gann angle line of the 2012 high
  


• 
  Our near-term trend bias remains lower in the metal while below the 1×2 Gann angle line of the August high at 1242
  


• 
  A convergence of the year’s intraday low and the 161.8% extension of the late October advance near 1182 is a downside pivot
  


• 
  A cycle turn window is seen around the end of the week
  


• 
  A daily close over 1242 would turn us much more positive on the metal
  

XAU/USD Strategy: Favor the short side while under 1242.

Focus Chart of the Day: EUR/USD

We have written a lot recently on the importance of this week for EUR/USD from a timing perspective as several long-term cycles converge over the next few days. Friday’s price action and clear failure at the 61.8% retracement of the 2009/2010 decline near 1.3900 makes us wonder whether the peak we have been looking for around this time has come a little early. Complicating the matter somewhat are the holidays and the low turnover they bring. That said, given the rather dramatic extent of Friday’s reversal so close to the turn window we have to assume it marks some sort of crescendo at least on an intraday basis. However, it wouldn’t surprise us to see a few days of higher daily closes this week before the Euro attempts to make its way lower. A key pivot for us on the downside is now the 2nd square root relationship of Friday’s high at 1.3655. A move below this level would be a clear sign that a top of some importance is indeed in place. While a move through 1.3900 would surprise us this week, only strength over 1.3975 after Friday would completely negate the potential for a cycle turn.

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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

Price & Time: Euro at a Major Cyclical Inflection Point This Week