Price & Time: Lost Opportunity for USD?

Talking Points

• USD/JPY lacking a catalyst
• NZD/USD rallies sharply
• USDOLLAR breaks key retracement

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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 remains in sideways to lower range below 122.00
• Our near-term trend bias is lower while below 120.50
• The 119.00 level is immediate support, but weakness below 118.40/20 is really needed to set off a more serious decline
• A very minor cycle turn window is eyed Friday
• A close above 120.50 would turn us positive on the exchange rate

USD/JPY Strategy: Like holding a reduced short position while below 120.50.

Price & Time Analysis: NZD/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• NZD/USD has rallied sharply over the past couple of days
• However, our near-term trend bias is lower while below .7525
• Weakness under the 50% retracement of the March – April advance near .7450 is needed to re-instill downside momentum in the rate
• A minor turn window is seen early next week
• A daily close over .7525 would turn us positive on the Kiwi

NZD/USD Strategy: Like the short side while below .7525 (closing basis).

Focus Chart of the Day: USDOLLAR

We view cyclical turn windows as opportunities for trends to re-assert themselves. Sometimes they do and sometimes they don’t, but there are always implications. Last week, for instance, the FXCM US Dollar Index (equally weighted basket of USD vs. EUR, JPY, GBP & AUD) had a turn window. There was an initial reaction around the 50% retracement of the December – April advance around 11,750, but the index could not make any real headway. After a few days of consolidation the index turned down again and took out this potentially significant cyclical low. A lost opportunity for the broader USD uptrend to reassert itself. The implications are that this correction against the primary trend will continue which certainly looks to be the case after yesterday’s wide range bar. The 61.8% retracement of the December-April advance near 11,655 is an important near-term pivot with traction below needed to set off the next leg lower in the index. A move back through 11,800 is needed to alleviate immediate downside pressures.

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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 kkerr@fxcm.com. Follow me on Twitter @KKerrFX