Price & Time: Cyclical Convergence in Gold Suggests Volatility Ahead

Talking Points

• USD/JPY touches highest level in over a month
• GBP/USD nearing key support level
• Key time period approaching for Gold

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 traded at its highest level since late January on Friday before encountering stiff resistance at the 3rd square root relationship of the year’s low near 103.75
• Our near-term trend bias is positive in the exchange rate while above 101.35
• The 103.75 level is an important near-term pivot that needs to be surpassed soon to pave the way for a more important push higher
• A minor cycle turn window is seen today
• A close under the 4th square root relationship of the year’s high at 101.35 would turn us negative on the exchange rate

USD/JPY Strategy: Like the long side while over 101.35.

Price & Time Analysis: GBP/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• GBP/USD failed on Friday at the 127% extension of the Jan/Feb decline near 1.6780
• Our near-term trend bias is higher in Cable while over 1.6600
• A daily close over 1.6755 is needed to signal a resumption of the broader uptrend
• The next couple of days are a medium-term cycle turn window in the exchange rate
• Only a daily close below the 38% retracement of the February range near 1.6600 would turn us negative on the Pound.

GBP/USD Strategy: Like the long side while 1.6600 holds.

Focus Chart of the Day: GOLD

The next week or so is shaping up to be an interesting one for Gold. The middle of this week is an important cycle turn window related to the 2012 high in the metal while the first part of next week is another window related to the low from the first half of 2013. Given the proximity of these two potentially important cyclical relationships we are tempted to view the next week as one large window where a material change in trend is likely to occur. We slightly favor a top heading into this key time period given the clear prevailing trend in place since the end of last year. However, this is only an assumption and could quickly change should the correction from last week gather pace over the next few days. The 1300 level remains a key support area. We will write more on the metal as this develops.

To receive Kristian’s analysis directly via email, pleaseSIGN UP HERE.

--- 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