Price & Time: Beware the End of March?

Talking Points

• Important cyclical relationships converging later this week for USD, important low developing?
• USD/JPY closing in on key resistance
• GBP/USD rebounds from key Fibonacci level, bigger recovery underway?

Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/JPY has moved modestly higher over the past few days after once again finding support near the 101.35 4th square root relationshipof the year’s high
• Our near-term trend bias is higher in USD/JPY while above 101.35
• The 2nd square root relationship of the year’s low at 102.75 is immediate resistance with a move above needed to re-instill upside momentum for a more important move higher
• A cycle turn window is seen over the next day or two
• Only aggressive weakness back under 101.35 would turn us negative on USD/JPY

USD/JPY Strategy: We like being long against 101.35.

Price & Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• GBP/USD has come under steady pressure following last week’s break of the 2nd square root relationship of the year’s high at 1.6560
• Our near-term trend bias is now lower in Cable
• Support was found earlier today at the 1.6460 161.8% extension of the late Feb/early March advance, this level needs to be broken to signal recent weakness has been more than just a minor correction
• An important cycle turn window is seen later this week
• A daily close back over 1.6690 would turn us positive on the Pound

GBP/USD Strategy: We like selling into strength over the next few days against 1.6690.

Focus Chart of the Day: FXCM Dollar Index

The latter part of this week has strong timing for several of the main currency pairs. As such, we will be keeping close tabs on the Dow Jones FXCM Dollar Index as it is an equal weight basket of EUR/USD, GBP/USD, USD/JPY and AUD/USD and is a good way to monitor general USD strength. A daily chart shows the index has been in a general downtrend since July of last year. Is this about to change? Cyclical analysis suggests there is a strong possibility. Last week’s bounce off 10,500 in the index looks to be the first move higher. A re-test that holds or even slightly undercuts 10,500 heading into Thursday/Friday would complete the recipe for a more important bottom in the USD during this turn window. We suppose that aggressive strength over the next few days would raise the possibility of cyclical inversion (high instead of a low) heading into the end of the week, but this looks unlikely and we will cross that bridge when/if we get there. Aggressive weakness in the index under 10,500 after Friday would completely undermine the burgeoning positive cyclical view.

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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 [email protected]. Follow me on Twitter @KKerrFX