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Monday January 18, 2010 - 11:46:58 GMT
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Forexpros Daily Analysis - 18/01/2010ForexPros Daily Analysis January 18,
Fundamental Analysis: Interest Rate
Traders are looking forward to the publication tomorrow
(January 19), of the Bank of Canada, regarding short term interest rate. The
decision on where to set interest rates depends mostly on growth outlook and
inflation. The primary objective of the central bank is to achieve price
stability. High interest rates attract foreigners looking for the best
"risk-free" return on their money, which can dramatically increases demand for
the nation's currency. A higher than expected rate is positive/bullish for the
CAD, while a lower than expected rate is negative/bearish for the CAD. Analysts
predict no change in the reading which will remain at 0.25%.
We will put all our focus
for today on 1.4299, where there is the rising trend line from December 22nd
bottom. Staying above it or breaking it will determine the direction for today.
If broken, what we called a minor probability in last weekâ€™s report (that we
have bumped into a medium term reversal level at Fibonacci 38.2%) will get
boosted. In this case, the drop from 1.4577 will carry on, and its targets will
be the Dec 22nd bottom 1.4216, and the important support at 1.4176. Short term
resistance is at 1.4421, and breaking it will bring back a little bit of the
positive outlook, targeting 1.4509 & 1.4555.
1.4299: the rising trend line from Dec 22nd bottom.
â€¢ 1.4216: Dec 22nd
â€¢ 1.4176: Sep 1st low.
â€¢ 1.4421: a
falling trend line on the intraday charts and hourly chart.
â€¢ 1.4509: Nov 3rd
â€¢ 1.4555: Jan 11th
Dollar-Yen tried to break
90.76 on Friday, before going back above it after an short-lived attempt, and
stayed above it until the weekly close. But on the other hand, the internal
structure of the last two moves: the rise from 90.71 & the fall from 92.03
could be read as parts 1 & 2 of a 3-way correction, or in the language of
Elliott Wave analysis: waves a & b. In this case, a similar up move to the
one from 90.71 will appear before breaking this important bottom. Such a move
will ideally target 91.87 & 92.59. And given that short term resistance is
at 91.30, a break here would indicate this move is already underway. On the
other hand, breaking 90.76 will eliminate this assumption, and indicates a
continuation of the drop on the last day of the week, which is expected to hit
this pair hard, and drag it to 89.79 and may be
â€¢ 90.76: Fibonacci 61.8% for the whole rising
move from 88.91 to 93.75.
â€¢ 89.79: Fibonacci 61.8% for the whole rising move
from 87.35 to 93.75.
â€¢ 89.22: a previous well known support/resistance
â€¢ 91.30: the falling trend line from
â€¢ 91.87: Fibonacci 38.2% for the whole move down from 93.75.
92.59: Fibonacci 61.8% for the whole move down from
---Forex Trading Analysis written by Munther Marji for ForexPros.For information on
forex quotes see ForexPros.
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