Price & Time: Key Week Ahead For the Financial Markets

Talking Points

• USD/JPY trades at highest level since early January
• Gold nearing key Fib zone
• Euro negative sentiment at cautionary extreme?

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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 exploded higher to start the week and traded at its highest levels since early January
• Our near-term trend bias remains higher while above 103.35
• The YTD high near 105.40 is the next upside pivot of note
• A cycle turn widnow is seen this week
• A move under 103.35 would turn us negative on the exchange rate

USD/JPY Strategy: Like the long side while above 103.35.

Price & Time Analysis: GOLD

Charts Created using Marketscope – Prepared by Kristian Kerr

• XAU/USD has fallen to its lowest level since mid-June
• Our near-term trend bias is negative while under 1297
• The 1263 area is an important reaction zone
• A cycle turn window is eyed around the middle of the month
• A move over 1297 would turn us positive on the metal

XAU/USD Strategy: Square.

Focus Chart of the Day: EUR/USD

This is an important week for the financial markets. In fact I would argue it is one of the top 3 weeks of the year. I say this because several key long-term cycles are all converging around this time. At the same there are plenty of potential fundamental catalysts to spark the changes in trend (or at a minimum a pause in trend) I am looking for. The euro and Dow are at the top of my list of instruments that seem vulnerable here and they will be watched very closely for any signs of a turn. I have gotten plenty of grief over the past few days from readers on my expectation for some kind of turn in the single currency this week (maybe as late as early next week). I might be very wrong, which is not that unusual when trying to go against a very strong trend like the euro at the moment. However, I am a contrarian by nature and the sentiment profile in EUR/USD is at a point of concern. On Friday, the Daily Sentiment Index fell to just 8% bulls. A single digit bullish percentage is usually a good sign of market with too many people leaning the same way. Factor in the cyclical picture and the proximity of several key support levels like the 78.6% retracement off the 2013 low and the 50% retracement of the 2012 one and I like the odds of a counter-trend move developing.

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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