Price & Time: Gold Resuming the Downtrend?

Foreign Exchange Price & Time at a Glance:

EUR/USD:

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD overcame the 4th square root progression of the year-to-date low at 1.3205 earlier this week but has since stalled out near the 4th square root progression of the year’s high near 1.3240
• While the exchange rate is above 1.3025 our near-term trend bias will remain higher
• A close over 1.3240 now looks required to prolong the advance and setup a move to test critical resistance near 1.3300
• Thursday and Friday are a minor cycle turn windows, but a bigger picture cyclical inflection point next week looks to be the real attraction and the ideal time for the broader downtrend to reassert
• The 2×1 Gann angle line of the year-to-date low at 1.3150 is immediate support, but only aggressive weakness back under 1.3025 will turn us negative on the Euro

Strategy: Like holding long positions while above 1.3025.

GBP/USD:

Charts Created using Marketscope – Prepared by Kristian Kerr

• GBP/USD failed again on Thursday near the 61.8% retracement of the June to July decline in the 1.5390 area
• While over 1.5140 our near-term trend bias has to remain higher in Cable
• The 1.5390 level remains a critical upside pivot with traction above this level needed to trigger a renewed push higher in the rate
• Near-term focused cycle studies favore weakenss over the next couple of days, but next week looks like a more important cyclical turn window
• The 4th square root progression from the June high at 1.5250 is immediate support, but only weakness below 1.5140 turn us negative on Sterling

Strategy: Like holding long positions while over 1.5140, but these should be reduced after the repeated failures at 1.5390.

USD/CAD:

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/CAD traded to its lowest level in over a month on Wednesday before finding support at the 61.8% retracement of the 2011 to 2012 decline in the 1.0265
• While under the 2nd square root progression of the year’s high in the 1.0400 area our near-term trend bias will remain lower in Funds
• The 1.0265 level is a minor pivot, but weakness under a Fibonacci cluster at 1.0240 is really needed to trigger the next significant decline
• The middle of next week looks like a clear cycle turn window in the rate
• The 50% retracement of the June to July advance at 1.0370 is immediate resistance, but only traction over 1.0400 turns us positive on USD/CAD

Strategy: Like holding short positions for a few more days while under 1.0400.

Focus Chart of the Day: GOLD

XAU/USD reversed during the medium-term cycle turn window we pinpointed for this week albeit from higher levels than we had initially anticipated. We had been eyeing the 50% retracement of the June range at 1301 as a natural stopping point, but a breach of this level at the start of the week forced a move to the next point of symmetry near the 161.8% projection of the late June/early July correction near 1348. Wednesday’s clear failure from this level at the tail end of the turn window sets the stage for a more important move lower over the next few days/ weeks. The 1310 level is initial support, but a break of 1274 is really needed to set off a more important decline to re-test 1215. With the turn window now over, strength back over 1248 would be very surprising. Such a scenario would be very positive for the metal and likely set up a much more important move higher.

— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com