Price & Time: Gold Exhaustion Near?

Talking Points

  • USD/JPY stalls at long-term resistance
  • GBP/USD fill early September gap
  • New few days look critical for Gold

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Foreign Exchange Price Time at a Glance:

Price Time Analysis: USD/JPY

Price amp; Time: Gold Exhaustion Near?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY traded at an almost 6-year high earlier in the week before stalling near trendline resistance in the 107.40 area
  • Our near-term trend bias remains lower in the rate while above 105.30
  • Resistance between 107.40 and 108.30 looks formidable and a move through this zone is needed to set off the next impulsive leg higher
  • An important turn window is eyed later in the month
  • A close below under 105.30 would turn us negative on USD/JPY

USD/JPY Strategy: Like holding reduced long positions above 105.30.

Price Time Analysis: GBP/USD

Price amp; Time: Gold Exhaustion Near?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has come under renewed pressure over the past few days after filling the gap from the September 8th open
  • Our near-term trend bias is lower in Cable while below the 2nd square root relationship of the year’s low at 1.6305
  • Weakness under 1.6140 is needed to re-instill downside momentum in the rate
  • An important cycle turn window is eyed around the latter part of the month
  • A move over 1.6305 would turn us positive on the Pound

GBP/USD Strategy: Like holding reduced short positions while below 1.6305.

Focus Chart of the Day: Gold

Price amp; Time: Gold Exhaustion Near?

Sentiment towards Gold as measured by the Daily Sentiment Index (DSI) remains abysmal. As of Monday’s close only 7% of traders are bullish on the metal (93% are bearish). Such high one-way conviction in the direction of the market makes us nervous. With the end of this week and the start of next looking like a pretty key cyclical period we can’t help but wonder if the metal is due for some kind of counter-trend run after this time. The real question for us is from what price point could such a move materialize? Clouding the picture somewhat are all the volatility catalysts over the next few days with the FOMC decision and Scottish independence vote at the top of the list. A final flush out on the back of these towards last year’s low in the 1180 region would be ideal from a trading standpoint, but in no way is such action guaranteed. With all this uncertainty and event risk we will probably wait until next week to look to position – assuming the market has not already moved sharply higher or knifed through 1180.

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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

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