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Thursday August 26, 2010 - 10:04:24 GMT
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Forexpros Daily Analysis - 26/08/2010ForexPros Daily Analysis August 26,
The Euro traded violently yesterday, breaking both the
support & resistance we specified in yesterdayâ€™s report without reaching any
of the targets in both cases. These â€śnervousâ€ť moves are definitely a cause of
frustration for us, we hope for an end of such price activity soon, since they
mean nothing technically. Looking at the daily chart, we can see signs of a
reversal, on top of which is the (Inverted Hammer) pattern, which appears twice.
Last week, we suggested a wave count with 5 complete waves up from 1.1875. And
as we reach Fibonacci 50% for this massive move at 1.2604, we should not neglect
the possibility that the correction might me over after reaching such an
important target. And with the inverted hammer patter, the possibilities that
the drop from 1.3332 is over, have became higher. Short term support is at
1.2667, and we believe a break here will indicate that the drop is far from
over, and that the Euro will sink below Tuesdayâ€™s low. In this case the
suggested targets will be the same as yesterday: 1.2550 first, then the all
important 1.2432. On the other hand, yesterdayâ€™s trading proved the importance
1.2724, and this will be our resistance of the day. If broken, the Euro will
jump to important Fibonacci levels at 1.2871 &
â€˘ 1.2667: the rising trend line from Tuesdayâ€™
low on the hourly chart.
â€˘ 1.2550: the support area containing Jul 7th &
â€˘ 1.2432: Fibonacci 61.8% for the whole rise from 1.1875 to
â€˘ 1.2724: Fibonacci 38.2% for the drop from
â€˘ 1.2871: Fibonacci 38.2% level for the drop from the 3-month high of
â€˘ 1.2959: Fibonacci 50% level for the drop from the 3-month high of
The Dollar jumped more
than 120 pips from its 15-year low which it hit on Tuesday at 83.58, reflecting
a â€śfearâ€ť of what the BoJ might do! 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, which we expected, from the very beginning, that it will dive
below 84.81. Letâ€™s leave the daily & weekly charts we have been obsessed
with lately, and just focus on the hourly chart. We can see that there is a very
exciting trend line, dropping from June 4th top. This line is running currently
at 85.28. Therefore, all of our attention is at the exciting trend line &
the importance it provides. As long as we are trading below this line, the
downtrend will be ok, but if we break the resistance 85.28 we will shoot up
targeting 86.81 and may be 87.70. The support is provided by 84.07. If broken,
there will be nothing stopping the price from reaching our awaited target 82.65,
except for the BoJ. And if the â€śJapsâ€ť keep quiet, we could see 79.75 later, may
be next month.
â€˘ 84.07: Fibonacci 61.8% for the rise
from Tuesdayâ€™s low, and 15-year low 83.58.
â€˘ 82.65: the trend line combining
the monthly lows of Dec 08, Jan & Nov 09, on the weekly chart.
this pairâ€™s historical low.
â€˘ 85.28: the falling
trend line from June 4th top on the hourly chart.
â€˘ 86.81: Jul 26th &
â€˘ 87.70: June 26th top.
At an early hour this morning, the Pound broke the resistance specified
in yesterdayâ€™s report 1.5522, breaking with it the falling trend line from this
yearâ€™s high. Earlier, the pair broke the rising beautiful trend line from June
8th bottom, breaking with it the short term rising trend. Todayâ€™s jump has
brought things back to complete chaos, since it was a â€śmove-upâ€ť after breaking a
2.5 month old rising trend line! This may indicate that the Pound is on the way
to retest that line at the very important 1.5757. Short term resistance is at
1.5600, if broken, the price will start rising with the objective of testing a
very important level: 1.5757. If this resistance is broken, the short term
uptrend & medium term uptrend will be revived, with a first target at
1.5860. On the other hand, support is at 1.5542, and breaking it would give the
Dollar a chance to make the Pound pay back the losses of the Asian session.
Targets will be 1.5461 & 1.5320.
important intraday level.
â€˘ 1.5461: Aug 20th low.
â€˘ 1.5320: Fibonacci
38.2% for the massive move up from 1.4227 to
â€˘ 1.5600: the falling trend line from Aug
â€˘ 1.5757: Fibonacci 61.8% for the drop from Aug 6th major top.
1.5860: a very exciting resistance appearing on the hourly
---Forex trading analysis written by Munther Marji for
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- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.
- POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.
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