Forexpros Daily Analysis - 21/09/2010

ForexPros Daily Analysis September 21, 2010


Euro Dollar

Stunningly, the Euro stopped exactly & down to the pip at our suggested resistance in yesterday’s report 1.3118, to confirm the importance of this level, which will live to see itself as our resistance for one more day. The Euro had penetrated 1.3047 on Thursday, and jumped strongly, reaching the first suggested target for this break 1.3145, it stopped there, and dropped from Friday high which was 1.3157, sharply. We have abandoned our negative outlook after the penetration of 1.3047, but it seems that the Euro has failed at the first serious test after that. The price has stopped at the retest level of the rising trend line from the June 7th low (please refer to the attached chart), and then left us with a (Shooting Star) candle pattern. Therefore, the technical outlook, even after penetrating 1.3047, is not strong enough to consider the Euro a “buy”, after failing in the retest. Short term resistance is at 1.3118, and only if broken will the Euro have another chance to rise. If it does break this level targets will be 1.3194 & 1.3306. On the other hand, the support is at 1.3056, and if broken, we will head towards the Fibonacci retracement levels for the whole rise from 1.2643 to Friday’s high. The first two of these levels are 1.2961 & 1.2900.

Support:
• 1.3056: the rising trend line combining Wednesday’s, Thursday’s & yesterday’s lows, on the hourly chart.
• 1.2961: Fibonacci 38.2% for the rise from 1.2643.
• 1.2900: Fibonacci 50% for the rise from 1.2643.

Resistance:
• 1.3118: Yesterday’s high, Aug 5th low.
• 1.3194: Aug 2th high.
• 1.3306: Aug 9th high.

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USD/JPY

No change whatsoever in this pair that is not moving! Japan warned speculators once again on Friday, that it will step in if needed. The price has moved sideways for a few days now. This leaves a question hanging: after the intervention, what’s next? this pair calmed after the Japs stormed it up! But failure to break 85.89 which we talked about its importance in the past few days, leaves possibilities of downside activity open. All the major Yen pairs jumped together on Wednesday, gaining more than 2.5% each, which fueled speculation that the Japs have done it! Shortly after that, in a quickly arranged news conference, finance minister (Noda) confirmed it and said: “yes, we have intervened”! Finally ladies & gentlemen, here is your long awaited intervention. The Japanese authorities have had it after they saw 82 appears on the screens for the first time since 1995. A lot of people would now argue that this is not the time for technical analysis, but the intervention only takes a short period of time to be completed, then things go back into the hands of the market powers. This intervention has caused the price to break the falling trend line from June 4th top on the hourly chart, which resulted in reaching 85. Now, this surge has a huge barrier in front of it, which is 85.89! This is where the falling trend line from May 5th top is running currently. If broken, the price will fly, targeting 86.81 & 87.56. On the other hand, the support is at 84.25, and if broken we will drop to the important 83.73, then 82.87.

Support:
• 84.25: Fibonacci 38.2% for the short term.
• 83.73: Fibonacci 61.8% for the short term.
• 82.87: Sep 14th low, and the low for the last 15 years.

Resistance:
• 85.89: the falling trend line from May 5th top on the daily chart
• 86.95: Jul 1st low.
• 87.56: Jul 20th high.

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GBP/USD

The Pound broke the support specified in yesterday’s report, 1.5660 and dropped hard to successfully reach our suggested target of 1.5549. with this drop, the Pound has sailed away from the all important 1.5728, and therefore, the technical outlook is now negative, without a doubt, and based on several factors which are: 1. The extremely accurate top at 1.5728, 2. Breaking the rising trend line from last week’s high & 3. Yesterday’s drop to a 6-day low. Short term support is at 1.5558, if broken, we expect a strong drop which will look a lot like yesterday’s fall. The targets for such a drop will be the important 1.5438, then 1.5344. Resistance is at 1.5655, and only with a break here that we will change our negative outlook. If we get this break, things will change, and we will be on the way yet to another test of the important 1.5728 level, and if broken we will shoot for 1.5854. But, as long as we are below 1.5655, things are negative for this weak pair.

Support:
• 1.5558: the rising trend line from yesterday’s low on intraday charts.
• 1.5438: short term Fibonacci 61.8% support.
• 1.5344: Sep 10th low, a well known support area.


Resistance:
• 1.5655: Fibonacci 61.8% for the drop from Friday’s top.
• 1.5728: Fibonacci 61.8% for the whole drop from Aug 6th top.
• 1.5854: Aug 4th low.

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Forex Trading Analysis written by Munther Marji for ForexPros.

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