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Tuesday August 31, 2010 - 10:16:36 GMT
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Forexpros Daily Analysis - 31/08/2010
ForexPros Daily Analysis August 31, 2010
Yesterdayâ€™s headline for the EURUSD was â€śSlowly rising, signaling
weaknessâ€ť, and the Euro listened, and kept on falling from the weekly
open, losing more than 130 pips from its Asian session high. And with
this drop, the pair broke our support 1.2675 and dropped more than 40
pips below it so far. This break, even though did not have immediate
results, will destroy the Euro on the short term, and probably harm it
on the medium term as well. The reason we believe so is that, this break
in specific is the single most important technical factor in
classifying the rise from 1.2586 as purely corrective. Therefore, we
expect the pair to lose ground, and start to drop with targets below
last Tuesdayâ€™s bottom. Short term support is at 1.2643, and once it is
broken we will target the same targets suggested yesterday: 1.2550 first
then the all important 1.2432, which is critical for the medium term
outlook. On the other hand, the resistance is at 1.2721, and breaking it
would reverse the affect of the channel break. This is highly
unexpected, but if it happens, the Euro will reject our negative outlook
and target important Fibonacci levels at 1.2792 & 1.2871.
â€˘ 1.2643: important intraday level.
â€˘ 1.2550: the support area containing Jul 7th & 12th lows.
â€˘ 1.2432: Fibonacci 61.8% for the whole rise from 1.1875 to 1.3332.
â€˘ 1.2721: Fibonacci 61.8% for the drop from Fridayâ€™s top.
â€˘ 1.2792: Fibonacci 61.8% for the drop from 1.2920.
â€˘ 1.2871: Fibonacci 38.2% level for the drop from the 4-month high of
Although it came close to the 86 level after this weekâ€™s open, reaching a
9-day high, Dollar/Yen came back down in the midst of the
disappointment of the BoJ yesterday. The Yen is back in the driverâ€™s
seat, and it will drive this pair lower again. The support specified in
yesterdayâ€™s report at 84.77 was broken, and the price dropped to 84.11
so far. We expect the Yenâ€™s strength to continue, and we believe we will
see levels below 83.58 on the short term. We have noticed an ideal
(Dark Cloud Cover) candle pattern on the daily chart (please refer to
the attached chart), and this is a well known bearish pattern which
promises more excitement as we drop lower & lower, especially after
the BoJ disappointing the markets yesterday, and the â€śJapsâ€ť saying that
they are â€śwatching the currency movement closelyâ€ť! The market has had it
with such statements, the â€śjapsâ€ť now will have to take a seat and watch
the spectacular Yen show against the Dollar & the Euro. Short term
support is at 84.03, if broken, we will be on the way to our long
awaited target 82.50, and may be later we will test the psychological
level 80.00, given enough time. On the other hand, it is hard now to
imagine the Dollar beating the 85.21 resistance, But if it does, it will
be violent in the face of those who believe in the Yen, and will shoot
to 86.25 & may be 86.81.
â€˘ 84.03: previous well known support/
â€˘ 82.50: the trend line combining the monthly lows of Dec 08, Jan &
Nov 09, on the weekly chart.
â€˘ 80.00: psychological level.
â€˘ 85.21: Fibonacci 61.8% for the drop from yesterdayâ€™s high.
â€˘ 86.25: Jul 16th low.
â€˘ 86.81: Jul 26th & 27th low.
Early this morning, the Pound broke the support specified in yesterdayâ€™s
report 1.5441, after holding above it all day yesterday. With this
break this pair has left the â€śneutral zoneâ€ť which we said is between
1.5587 & 1.5441. Therefore, it is only logical now to expect the
Pound to dive. But after more than 150 pips down from yesterdayâ€™s top,
the price is subject to a short term correction, with a condition of
staying below 1.5510. The Pound is notorious for breaking, then moving
in the other direction, before moving in the right direction smoothly
and strongly. Short term support is at 1.5405, which we are trading just
above as this report is prepared. If broken, the Pound will continue to
fall, passing by 1.53 areas swiftly, and target 1.5293 & 1.5224. On
the other hand, we could see a correction up to 1.5510, without
changing this negative outlook. But if the Pound manages to break the
resistance 1.5510, our negative outlook will suffer, and the price will
shoot up to the important 1.5596, and the most important 1.5757.
â€˘ 1.5405: previous support/resistance area.
â€˘ 1.5293: Jul 22nd high.
â€˘ 1.5224: Jul 6th high.
â€˘ 1.5510: Fibonacci 61.8% for the drop from yesterdayâ€™s top.
â€˘ 1.5596: Aug 26th high and the slowly falling trend line from Aug 16th
â€˘ 1.5757: Fibonacci 61.8% for the drop from Aug 6th major top.
trading analysis written by Munther Marji for
Trading Futures and Options on Futures and Cash
transactions involves substantial risk of loss and may not be suitable
all investors. You should carefully consider whether trading is suitable
you in light of your circumstances, knowledge, and financial resources.
may lose all or more of your initial investment. Opinions, market data,
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Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales
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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.
- POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.
- POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.
- POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.
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