Price and Time: USD/CAD Burden of Proof

04/03/2015 9:00 am EST

Focus: FOREX

Kristian Kerr

Chief Technical Strategist, Forex Capital Markets LLC


Kristian Kerr, of DailyFX.com, offers a price and time analysis for two currency pairs with special focus on the one that continues to be a difficult chart to figure out. He also explains how the FOMC day reversal—which was one of the widest ranges in years on some of the highest volume in years—is still a nagging concern.



Talking Points

  • USD/JPY unable to get a foothold above 120.00
  • USD fails at key retracement
  • Range break needed for directional clarity in USD/CAD

Foreign Exchange Price and Time at a Glance:

Price and Time Analysis: USD/JPY

chart
Charts Created using Marketscope—Prepared by Kristian Kerr
Click to Enlarge

  • USD/JPY has stalled near the 50% retracement of the March range in the 120.20 area
  • Our near-term trend bias is negative on USD/JPY while below 120.60
  • Weakness under 119.50 is needed to re-instill downside momentum into the exchange rate and set up a test of more important downside pivots located at 118.40 and 118.00
  • A minor turn window is eyed here
  • A close over the 61.8% retracement of the March range at 120.60 would turn us positive on USD/JPY

USD/JPY Strategy: Square.

Price and Time Analysis: FXCM US Dollar Index

chart
Charts Created using Marketscope—Prepared by Kristian Kerr
Click to Enlarge

  • US dollar stalled its advance Wednesday near the 78.6% retracement of March range at 12,095
  • Our near-term trend bias is higher in the dollar while above 11,970
  • A move through 12,095 is needed to signal that the broader trend is resuming
  • A very minor turn window is eyed here
  • A close under 11,970 would turn us negative on the Index

FXCM US Dollar Strategy: Square.

Focus Chart of the Day: USD/CAD

chart
Click to Enlarge

USD/CAD continues to be a difficult chart to figure out. After being on the cusp of breaking down last week, the exchange rate reversed pretty much where it had to (trendline connecting February lows) and rallied right back up to recent highs. I suppose the simplest way to look at his thing is as range between 1.2830 and 1.2350, with everything else in between really just being noise in a medium-term sense. The FOMC day reversal—which was one of the widest ranges in years on some of the highest volume in years—is still a nagging concern of mine and will continue to be while we trade sub 1.2830. However, until or unless we convincingly break the February lows at 1.2350, there is really little reason to read too much into it. A daily settlement north of 1.2830 would alleviate our concerns about the action from a couple of weeks ago and set the stage for another meaningful run higher.

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.

By Kristian Kerr, Senior Currency Strategist, DailyFX.com

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