Price & Time: Do or Die Levels For Risk?

Talking Points

• USD/JPY breaks key Gann support level
• GOLD rally stalls
• SPX tests 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 has fallen to its lowest level in almost a month
• Our near-term trend bias is lower in the exchange rate while below 109.00
• A confluence of Gann levels between 106.95 and 106.65 is the next downside pivot of note with weakness below needed to set off a deeper decline
• A very minor turn window is eyed tomorrow
• A close over 109.00 is needed to turns us positive on the exchange rate again

USD/JPY Strategy: Like selling on strength while below 109.00

Price & Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• XAU/USD has continued higher since successfully testing last year’s low near 1179 earlier in the month
• Our near-term trend bias remains lower in the metal while below 1247
• Interim support is eyed at 1206, but a move under 1179 is really needed to set off a more important decline
• A minor turn window is tomorrow
• A close over 1247 would turn us positive on the metal

XAU/USD Strategy: Square

Focus Chart of the Day: S&P 500

Do or die level for “risk” as the cash S&P 500 closed right on its 200-day moving average on Friday. The break in the index under a key Gann level at 1932 last week looks important and warns the market has entered a venerable corrective phase. That said the 200-day moving average hasn’t been tested in almost two years so a bounce at least is to be expected. This immediate positive view is bolstered by contrarian sentiment readings which saw the DSI (Daily Sentiment Index) in the SPX and NDX reach extremes not seen in years on Friday with both falling to just 5% bulls. In many ways we are more interested in what the index does after the bounce (assuming there is one) as if the market fails to gain much momentum the disappointment to rally from such a widely anticipated level could easily prompt a bon a fide liquidation phase and a quick move down to the low 1800s. A move back over 1932 is needed to stabilize things, but the index probably needs to recapture the 50-day moving average way up around 1975 to trigger a more serious FOMO (Fear Of Missing Out) end of year rally push.

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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