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Thursday September 9, 2010 - 09:40:48 GMT
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Forexpros Daily Analysis - 09/09/2010ForexPros Daily Analysis September 09,
The Euroâ€™s rise stopped yesterday 7 pips before the level
we recommended selling at. We saw this pair topping at 1.2761, before diving
below 1.27 once again. Yesterdayâ€™s trading changed nothing in the technical
outlook we talked about in the last 2 reports. After stopping just below the
enormous resistance we talked about in Mondayâ€™s report 1.2920 (Mondayâ€™s high was
1.2916), we saw the Euro fall, breaking yesterdayâ€™s support 1.2777 and
successfully reached the first suggested target at 1.2690. With this drop, the
price has broken 3 critical levels at once: 1. the rising trend line from Aug
31st (which was broken at 1.2860), 2. the falling trend line from Sep 1st top
and 3. the massive support at 1.2777. This has shifted the short & medium
termsâ€™ technical outlook to the negative territory! But on the other hand, after
the big drop, chances of seeing a correction before resuming the journey south
are massive. The ideal target area for a short term correction is from 1.2757 to
1.2817. Therefore, todayâ€™s best strategy may be selling if the price rebounds to
this area. Short term resistance is at 1.2787, we do not expect it to be broken
today. But if it is broken, we will jump to 1.2901 & 1.3047. Support is at
1.2675, and a break here would target 1.2608 and may be at a later time
â€˘ 1.2675: important intraday level.
1.2608: Aug 25th low.
â€˘ 1.2550: Jul 12th low.
1.2787: Fibonacci 50% for the drop from Mondayâ€™s high, and the retest level for
the broken trend channel, the single most important resistance for the medium
â€˘ 1.2901: Aug 19th top.
â€˘ 1.3047: Fibonacci 61.8% for the medium
The Dollar/Yen dropped to
83.33, a new 15-year low! The latest drop came in the midst of the
disappointment in the BoJ, which after a 2-day meeting, announced that it will
not do anything at the moment to deal with the strong Yen. We have recently
adjusted the falling trend line on the hourly chart to include Fridayâ€™s jump. We
still believe in USD/JPY weakness, and we believe it will travel south. Only a
break of this line in specific will change our minds. This line is currently
running at 84.88 (please refer to the attached chart). To keep trading below it,
indicates more downside activity, especially after the BoJ disappointed again
yesterday, as the â€śJapsâ€ť said once again they are watching closely, but they did
nothing! The market has had it with these comments, and now the Japanese
authorities should buy tickets to the â€śYen Showâ€ť, and see what it will do to the
Dollar & the Euro! Short term support is at 83.59, and if broken, we will be
on the way to our long-awaited target at 82.00, then we will see the
psychological level at 80.00. On the other hand, the above mentioned trend line
is at 84.88. If broken, the Dollar will be violent to us all, as it will shoot
up to 86.25 & 86.95.
â€˘ 83.59: short term 61.8%
â€˘ 82.00: the falling trend line on the weekly chart,
combining the monthly lows o Dec 2008, Jan & Nov 2009.
â€˘ 84.88: the falling trend
line from June 4th top on the hourly chart
â€˘ 86.25: Jul 16th bottom.
86.95: Jul 1st low.
broke through the top of the falling hourly channel at 1.5441 yesterday. As it
did so, it also broke our resistance and reached the first suggested target
1.5507 successfully, before retreating back towards 1.54 this morning. The break
of the channel top will have its influence on the short term price activity, but
in order to do so, the price should hold above the support 1.5386 during the
current correction. If it does, we can say with confidence that the technical
outlook is positive. On the other hand, a break here would surely mean that the
Pound is not capable of using the channel break to harvest more gains. If 1.5386
is broken, a strong drop is to be expected, targeting 1.5262 at least, and may
be later 1.5147. Resistance is at 1.5461, it should be broken soon to facilitate
capitalization on the break of the channel before the weekend. In this case, the
targets will be huge, as we expect them to be 1.5646 &
â€˘ 1.5386: Fibonacci 61.8% for the rise from
â€˘ 1.5262: Jul 5th high.
â€˘ 1.5147: Jul 22nd low and the same area
with Jul 20th low as well (which was 1.5151).
1.5461: Fibonacci 61.8% for the short term.
â€˘ 1.5646: Fibonacci 50% for the
whole drop from Aug 6th top.
â€˘ 1.5728: Fibonacci 61.8% for the whole drop
from Aug 6th top.
---Forex trading analysis written by Munther Marji for
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