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Thursday July 22, 2010 - 12:16:55 GMT
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Forexpros Daily Analysis - 22/07/2010
ForexPros Daily Analysis July 22, 2010
Fundamental Analysis: German Ifo Business Climate Index
The German Information and Foschung (Ifo) Business Climate Index
determines the business sentiment and conditions in the Euro-zone. The
reading is concluded from survey of about 7,000 businesses. A higher
than expected reading should be taken as positive/bullish for the EUR,
while a lower than expected reading should be taken as negative/bearish
for the EUR. The analysts predict a future reading of 0.60%.
Precisely as we have expected, the long awaited reversal has finally
started. It came in a time after the Euro penetrated 1.30 and everybody
was cheering for it! However, it broke the support specified in
yesterdayâ€™s report at 1.2869, and successfully reached the suggested
target 1.2764. The evidences we provided in yesterdayâ€™s report has
triumphed for the technical analysis, over other things which favored
the Euro! We have mentioned evidence of a reversal yesterday,
especially: 1. No daily close above 1.2997 & 2. A â€śreversal dayâ€ť
pattern for yesterdays bar/candle on the daily chart. This shows just
how important the area around 1.30 is, which is probably the level most
qualified to turn the Euro around, and resize this soaring move into a
correction! This strong & sharp jump is a natural fruit of breaking
the top of the channel after touching it for a record number of times,
but eventually the Euro managed to break it! After that serious barrier,
the energized Euro had faced even a harder one: Fibonacci 61.8% for the
giant move down from 1.3690 to 1.1875. This level is at 1.2997, and
will act as a heavy weight barrier in the face of this rise, which in
spite of the fact that it has achieved more than 1000 pips so far, it
still looks corrective (simply because it did not break the divine ratio
61.8% by closing above it). Short term analysis shows a support at
1.2747, and breaking it would officially declare that we are in a
downward correction for the whole move from 1.2150 to 1.3026. The ideal
targets for this correction are at: 1.2588 & 1.2485. As for the
resistance, it is at 1.2793. A break here would indicate initiation of a
correction for the whole move down from 1.3026, with the ideal target
for this correction at 1.2913. If this one is broken, we will test
1.3026 itself once more!
â€˘ 1.2747: the rising trend lien from yesterdayâ€™s low on intraday charts.
â€˘ 1.2588: Fibonacci 50% for the rising move from 1.2150.
â€˘ 1.2485: Fibonacci 61.8% for the rising move from 1.2150.
â€˘ 1.2793: the falling trend line from 1.3026 on hourly chart.
â€˘ 1.2913: Fibonacci 61.8% for the drop from 1.3026 to yesterdayâ€™s low.
â€˘ 1.3026: Tuesdayâ€™s & 2-month high.
No change for yesterdayâ€™s outlook, after the Yenâ€™s strength penetrated
the lows of last December & January, we were left with no notable
support protecting the 15-year low which was reached last November at
84.81! We will not be a bit surprised if this pair started to move in
that direction, and tried to break that low! On the contrary, we have
been expecting this for weeks now, and it was included in our reports
several times. But, signs show that the possibility of a rising
correction to correct the fall from Wednesdayâ€™s top 89.09 to Fridayâ€™s
low 86.25 is growing. On the top of these signs: the inverted hammer
formation, which appeared on the daily chart, and the completed 5-wave
move (please refer to the attached chart). Therefore, and even though we
are negative about this pair on the medium term, we should not neglect
these signs which force themselves upon us for today! Short term support
is at 86.25, and if broken, the price will continue searching for new
lows, targeting 85.84, then the 15-year low 84.81. Resistance is at
86.95. A break here indicates that the odds of correction the whole 5
waves down from 92.87 are becoming massive. This will target 88.01 which
could prove troublesome first, then 88.78. It is worth mentioning that
breaking 86.25 even with a few pips will leave the odds of a rising
correction dramatically lower than they are now.
â€˘ 86.25: Fridayâ€™s low.
â€˘ 85.84: Nov 30th low.
â€˘ 84.81: Now 27th low, and the lowest level since 1995!
â€˘ 86.95: the falling trend line from Tuesdayâ€™s top on the hourly chart.
â€˘ 88.01: short term Fibonacci 61.8% level.
â€˘ 88.78: Fibonacci 38.2% level for the whole drop from 92.87 (the 5
trading analysis written by Munther Marji for
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