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Thursday August 12, 2010 - 09:34:37 GMT
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Forexpros Daily Analysis - 12/08/2010ForexPros Daily Analysis August 12,
The Consumer Price Index (CPI) measures the changes
in the price of goods
and services. The CPI measures price change from the
perspective of the
It is a key way to measure changes in
purchasing trends and inflation in the
US. A higher than expected reading
should be taken as positive/bullish for
the USD (as the common way to fight
inflation is raising rates, which may
attract foreign investment), while a
lower than expected reading should be
taken as negative/bearish for the USD.
The analysts predict a future reading
The Euro broke the support specified in yesterday's report
dropped as expected, reaching both suggested targets 1.2961 &
complete success, to move 400 pips away from last
"Jobs-report-top". We have commented on the retest case which took
after the Fed's statement Tuesday evening by saying: "it is a well
technical principle that such an accurate retest confirms the break
followed, and the new direction, which is down in this case. Looking at
attached chart, we can see that: 1. the rising trend line was
decisively and 2. the price retested this line in an accurate fashion.
are obvious indication of a falling trend. Therefore, unless the price
back up to trade above the broken trend line, we expect more
activity." Today, there is more to talk about technically; there is
complete 5-wave count for the rise from 1.1875, but does it mean that
uptrend is over? Also, there is not one but 2 channels on the daily
The first (shown in RED on the attached chart), combining the tops of
waves 1 & 3, which is already broken. The second channel (shown in
the attached chart) combines the tops of waves 3 & 5, and
although the price
tried to break it, it went back to trade inside it. The
bottom of the second
channel is at 1.2869, that is why this will be our
support for today. If
broken, the horror movie will go on for the Euro, and
we will drop to 1.2775
& 1.2681. The resistance is at the Asian session
high 1.2917, and if broken,
a short term correction will target not less than
1.2981 & not more than
* 1.2869: the
bottom of the rising channel on the daily chart.
* 1.2775: first of the main
Fibonacci retracement levels (the 38.2% level)
for the whole rise from this
year's low 1.1875 to last Friday's and 3-month
* 1.2681: Jul 14th
* 1.2917: Asian session top.
short term 38.2% Fibonacci level.
* 1.3047: short term 61.8% Fibonacci
The Dollar/Yen broke the
support specified in yesterday's report at 85.16,
and dropped to 84.70 which
is a 15-year low not seen since June 1995! Later,
it consolidated above 85,
and corrected the drop up to short term Fibonacci
50% level at 85.46. With
this, we have finally reached the main target of
this falling wave, which we
talked about for the last 2 weeks: a drop below
84.81 & a new 15-year
low, but what are the next targets? In the attached
chart, which is a weekly
one, we can see the falling channel from Sep 07
top. Although the bottom of
this channel is very far away, and is just above
74, but there is an
interesting trend line inside it, combining the monthly
lows of Dec 08, Jan
& Nov 09. This line is around 82.65 currently, providing
us with a
perfect target for this dropping wave, since we still expect, as
before, that it will dive below 84.70. Therefore, we expect the price
reach this target, and as we do, we also realize that the limited
of this pair indicates that this will take some time. As for the
the support is at 85.28, and breaking it would indicate that we
moving lower with the objective of breaking 84.81, and reaching
lows not seen
in 15 years. This will target 83.87 & at a later time, we
in our 82.65 target. The resistance is at 85.90, and if
broken, the price
will continue its bounce, targeting 86.43 &
* 85.28: important intraday level.
Fibonacci extension level 138.2% for the falling wave from 86.86,
the wave which started at 88.10.
* 82.65: the trend line combining the
monthly lows of Dec 08, Jan & Nov 09,
on the weekly
* 85.90: short term Fibonacci 61.8% level
* 86.43: the top of the rising corrective trend channel on the hourly
* 87.49: Jul 29th high.
---Forex trading analysis written
by Munther Marji for Forexpros.
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