Price & Time: Moment of Truth For the Yen

Talking Points

• EUR/USD probes important Gann level
• Kiwi closing in on important upside pivot
• USD/JPY at important juncture?

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

• EUR/USD has come under steady pressure since last week’s topside failure at the 1.3675 61.8% retracement of the year-to-date range
• Yesterday’s close under 1.3580 has shifted our near-term trend bias to negative again
• The 4th square root relationship of the year’s high at 1.3520 is a major pivot with a daily close below needed to signal that a new leg lower is unfolding
• The next important cycle turn window looks to be around the end of the month
• Only a move through 1.3675 would turn us positive on the euro

EUR/USD Strategy: Like adding to current reduced short position on strength over the next few days.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.3500	*1.3520	1.3550	1.3580	*1.3675

Price & Time Analysis: NZD/USD

• NZD/USD has moved steadily higher since reversing last week near the 50% retracement of the year-to-date range in the .8400 area
• Our near-term trend bias is now positive on the Bird
• The 2nd square root relationship of the recent low near .8590 is key resistance with a close over this level needed to confirm the start of a more important advance
• A minor cycle turn window is seen here
• A daily close under .8460 would turn us negative on the Kiwi

NZD/USD Strategy: Like adding to long position on weakness over the next couple of days.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
NZD/USD	*.8460	.8500	.8555	.8560	*.8590

Focus Chart of the Day: USD/JPY

We have been focused on the first half of June as a potentially important time in USD/JPY as a cyclical relationship with the 2011 low should influence during this period. At the start of this ‘turn window’ last week USD/JPY touched its highest level in a month before failing at key Gann resistance near 102.75. Since then the rate has come under fairly steady downside pressure. As this potentially important cyclical period comes to an end the big question for us is was the high last week the turn we were expecting or will weakness over the next few days lead to some sort of secondary low? Under 102.75 our bias has to remain lower in USD/JPY, but as we have been saying for weeks now we need to see a close under the 4th square root relationship of the year’s high at 101.35 to get excited about a more serious decline. If we get this technical development it should eliminate the risk of an inversion low during this turn window and set up a strong decline under 100.75. On the flip side, weakness over the next few days that fails to crack 101.35 and then reverses back through 102.75 would set up a potentially important low and not to mention a pretty clear right shoulder in a multi-week inverse head & shoulders pattern. This is not our favored scenario, but until this turn window closes we cannot completely discount it.