Price & Time: GBP/USD Turning?

Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

ChartPrepared by Kristian Kerr

• USD/JPY filled the gap from Monday’s open this morning before stalling its advance
• Our near-term trend bias is lower in USD/JPY while below 124.40
• A key downside attraction remains the December/March closing highs at 121.40
• A very minor turn window is seen Monday
• A close back over 124.40 would turn us positive on rate

USD/JPY Strategy: Like only a reduced short position while below 124.40.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
USD/JPY	*121.40	121.90	123.40	123.55	*124.40

Price & Time Analysis: S&P 500

ChartPrepared by Kristian Kerr

• S&P 500 fell to its lowest level in almost 3-months earlier this week before finding support at the 200-day movingaverage near 2055
• Our near-term trend bias is lower in the index while below 2107
• A close above 2055 is needed to set off the next leg lower
• A turn window of some importance is seen early next week
• A daily close back above 2107 would turn us positive again on the S&P 500

S&P 500 Strategy: Square.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
S&P 500	*2055	2064	2082	2090	*2107

Focus Chart of the Day: GBP/USD

GBP/USD failed last month at the 50% retracement of the 2014 – 2015 decline near 1.5875. Clear divergences in place on both daily OBV and ROC have warned that a more serious top could be forming, but so far downside price action has proven less than inspiring. The tide could be finally turning, however, as yesterday’s move below the 2nd square root relationship of the year’s high at 1.5675 is the first real negative technical development in weeks and re-focuses attention on the downside. The 200-day moving average around 1.5450 looks to be the next downside attraction of importance with weakness below there needed to confirm a more important shift lower in the pound. Strength back over 1.5790 would neutralize.

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Expectations of EURUSD and USDJPY Breaks Pushed to Next Week

Following a ten-month rally, the USDollar has spent the past few months developing a congestion pattern. With the boundaries closing in, the potential for a breakout is starting to stir speculators' interests. The same patterns are reflected in many of the dollar based majors - EURUSD, USDJPY, AUDUSD - and even equities. The Dollar is driven by rate expectations while stocks are the domain of 'risk trends'. Yet, both are going to struggle for motivation until more potent drivers come along. NFPs has added to the Fed rate forecast but not settled the debate between hawks and doves. The weekend Greek vote hangs over the Euro and general sentiment. Liquidity is also a hurdle with the US markets off early for an extended holiday weekend. There is plenty of pressure building up, but satisfaction is unlikely to come until at least next week. Given the circumstances, some positions should be taken off (like my EURJPY short) or avoided; while others may present opportunities in exactly the conditions that soothe (such as AUDCAD and GBPUSD). We discuss approach an expectations in today's Trading Video.

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