Price & Time: Cue the "Most Hated Rally in History" Talk

Talking Points

• 
  Secondary high in equities next week?
  


• 
  Euro sentiment near cautionary extremes
  


• 
  Gold finds support near key Gann line
  

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

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  EUR/USD touched its lowest level in almost a year yesterday before rebounding off the 38% retracement (polarity) of the 2011/2012 decline in the 1.3150 area
  


• 
  Our near-term trend bias remains lower in the euro while below 1.3285
  


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  Support is seen at 1.3150 and 1.3125 ahead of a key action/reaction zone between 1.3085/50
  


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  An important turn window is eyed next week
  


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  A close over 1.3285 would turn us positve on the euro
  

EUR/USD Strategy: Like reduced short position while below 1.3285.

Price & Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• 
  XAU/USD is struggling higher along the 2×1 Gann angle line of the year’s closing low
  


• 
  Our near-term trend bias is lower while below 1321
  


• 
  A close under the Gann line now at 1278 is needed to kick off a new leg lower in the metal
  


• 
  A cycle turn window is eyed next week
  


• 
  A move over 1321 will turn us positive on XAU/USD
  

XAU/USD Strategy: Square.

Focus Chart of the Day: DOW 30

The recent push to new highs in the main US stock indices has many thinking the “all clear” has been signaled and stocks are about to make another one of their patented celestial runs into the end of the year. One of the weirder pieces of analysis I have seen recently is an overlay of the Dow when it crossed 2000 and the S&P 500 now. Supposedly it has some very bullish implications. Frankly I don’t understand what one has to do with the other, but I am probably not one to judge as I myself have been known to use some far from mainstream analysis. Chatting with a colleague yesterday we realized there is little if any angst heading into the fall period this year. A far cry from years past. Personally I think this is a mistake, but also an interesting snapshot of current market psychology. Since the start of the year I have been writing about the mid-July to early September period and its potential to mark some sort of important inflection point in US stocks. The Dow put in a peak almost exactly in the middle of July and then sold off 5% over three weeks. I take this action as a sign that the cyclical analysis is on point. Heading into the end of this key cyclical period the Dow is right back at new highs. While most see this as positive, I see it as quite dangerous and setting us up potentially for some kind of secondary high as this key “turn window” closes. If we do get a clear high next week I think the stock market is in for a rocky few months.

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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.

— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

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

Price & Time: Cue the "Most Hated Rally in History" Talk