Price & Time: Euro Touches Highest Level Since October 2011

Talking Points

• EUR/USD punches through key resistance to trade at multi-year high
• USD/JPY overcomes key Gann level
• Caution required in USD/CHF early next week

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

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD traded at its highest levels in almost 2 and a half years on Friday
• Our near-term trend bias is higher in the Euro while over 1.3730
• A move over the 50% retracement of the 2008/2010 decline and the 1.618% projection of the 1Q13 decline between 1.3955/70 would be further evidence of a more important break
• A minor cycle turn window is seen around the middle of next week
• Only a daily close below 1.3730 would turn us negative on the Euro

EUR/USD Strategy: Look to buy on weakness while 1.3730 holds.

Price & Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/JPY finally broke above the 2nd square root relationship of the year’s low at 102.75 on Thursday to trade at its highest level in over a month
• Our near-term trend bias is positive in the exchange rate while above 101.35
• The 1x1 Gann angle line from the year’s high at 103.15 is clear resistance and a move over this level is needed to set off another leg higher
• Early next week is a minor cycle turn window
• 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.

Focus Chart of the Day: USD/CHF

USD/CHF has come under renewed pressure over the past 24 hours to trade at its lowest level in almost two and a half years. Sentiment, not surprisingly, has turned rather negative on the exchange rate and most are now eyeing a deeper and immediate decline. February US non-farm payrolls could obviously prompt further losses, but we are cautious on the rate heading into next week as an important cycle turn window related to the August 2011 low is seen on Monday/Tuesday. We suspect this could slow the decline and possibly even reverse it. Key support levels to watch for a reaction are .8745, .8700 and .8665/80. Continued weakness (new yearly lows) after Tuesday would be very negative and further confirm the strength of the downtrend. Such a scenario would likely see weakness persist into the latter part of the month.

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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