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Wednesday July 7, 2010 - 09:42:41 GMT
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Forexpros Daily Analysis - 07/07/2010
ForexPros Daily Analysis July 7, 2010
Fundamental Analysis: ECB Press Conference
European traders anticipate the ECB Press Conference. The European
Central Bank holds this monthly press conference about 45 minutes after
the Minimum Bid Rate is announced. It is about an hour long and has two
parts: First, a prepared statement is read; then the conference is
opened to press questions. The questions often lead to unscripted
answers that trigger market volatility. The press conference, which is
broadcasted on the ECB website, is the ECB's primary method for
communicating with investors about monetary policy. It covers in detail
the factors that affected the most recent interest rate and other policy
decisions, such as the overall economic outlook and inflation. Most
importantly, it often provides clues regarding future monetary policy.
If the statement is more hawkish than expected, that is usually good for
The Euro broke the resistance specified in yesterdayâ€™s report 1.2570,
and successfully reached the first suggested target 1.2656 with a very
good accuracy since yesterdayâ€™s high was 1.2660. The most important
technical event, was touching the top of the rising channel on the
hourly chart for the second time yesterday, after touching it for the
first time on Friday. We could be before an important turning point at
1.2660, since we saw the price falling away from this to 1.2575 during
the Asian session. We should carefully watch the top of this channel,
which is at 1.2681 currently. We will not be able to escape the fact
that a break here will be a very positive signal for both the short
& medium terms. But, if we keep trading below this top, we could be
facing a turning point which will probably lead to a drop of hundreds of
points. Short term support is at 1.2548, and once we break it, we will
start drifting away from the channel top, and will target 1.2442, and
may be 1.2370. The resistance is at 1.2603, and if broken we will target
another test of the channel top at 1.2681. If this one is also broken,
1.2737 will be a first & modest target for this break, on the way to
â€¢ 1.2548: short term Fibonacci 61.8% level.
â€¢ 1.2442: May 18th high.
â€¢ 1.2370: May 25th high.
â€¢ 1.2603: the falling trend line from yesterdayâ€™s top.
â€¢ 1.2681: the top of the falling channel on intraday charts.
â€¢ 1.2737: May 12th high.
The Dollar/Yen broke the support specified in yesterdayâ€™s report 87.57,
only to reach 87.33. But this does not change the positive technical
outlook for this pair. We still believe in the possibilities of a strong
bounce. With this consolidation around 88, and after bouncing from the
support area shown on the hourly chart below, and after clearly breaking
the falling trend line from June 21st top (please refer to the attached
chart), we think that the possibility of a bounce is rising, even if
that was for a correction. Short term support is at 87.35, and breaking
it would indicate a continuation of the drop to 86.47 & 85.84. The
resistance is at 87.72, and breaking it would mean that the Dollar is
about to capitalize on the break of the above mentioned trend line,
which will ideally target short term Fibonacci levels: 88.67 &
89.20. This pair is going as expected, in the expected direction, and in
convergence with our negative technical outlook for the medium term. We
absolutely expect the fall to continue on the medium term. But after
surviving at 87.35, we should not neglect the enormous possibilities of a
bounce up: a bounce is highly probable, even if it was a temp, but the
trend is down without a shadow of a doubt!
â€¢ 87.35: an obvious support area on the hourly chart, and Dec 9th 09
â€¢ 86.47: previous well known support.
â€¢ 85.84: Now 30th 09 low.
â€¢ 87.72: short term Fibonacci 61.8% level.
â€¢ 88.67: Fibonacci 38.2% for the drop from 91.45.
â€¢ 89.20: Fibonacci 50% for the drop from 91.45.
trading analysis written by Munther Marji for
Trading Futures and Options on Futures and Cash
Forex transactions involves substantial risk of loss and may not be
suitable for all investors. You should carefully consider whether
trading is suitable for you in light of your circumstances, knowledge,
and financial resources. You may lose all or more of your initial
investment. Opinions, market data, and recommendations are subject to
change at any time.
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