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Forexpros Daily Analysis - 20/09/2010
ForexPros Daily Analysis
September 20, 2010Euro DollarAlthough the Euro penetrated 1.3047 on Thursday, and jumped
strongly, reaching the first suggested target 1.3145, it stopped there, and
dropped from Friday high which was 1.3157, sharply. The importance of breaking
1.3047 comes from the fact that this level is Fibonacci 61.8% for the whole drop
from 1.3332 which is a 4-month high, to 1.2586 which is a 2-month low. We have
abandoned our negative outlook after the penetration of 1.3047, but it seems
that the Euro has failed at the first serious test after that. The price has
stopped at the retest level of the rising trend line from the June 7th low
(please refer to the attached chart). Therefore, the technical outlook, even
after penetrating 1.3047, is not strong enough to consider the Euro a â€śbuyâ€ť,
after failing in the retest. Short term resistance is at 1.3118, and only if
broken will the Euro have another chance to rise. If it does break this level
targets will be 1.3194 & 1.3306. On the other hand, the support is at
1.3060, and if broken, we will head towards the Fibonacci retracement levels for
the whole rise from 1.2643 to Fridayâ€™s high. The first two of these levels are
1.2961 & 1.2900.
â€˘ 1.3056: the rising trend line
from Fridayâ€™s low on intraday charts.
â€˘ 1.2961: Fibonacci 38.2% for the rise
â€˘ 1.2900: Fibonacci 50% for the rise from
â€˘ 1.3118: Aug 5th low.
â€˘ 1.3194: Aug 2th
â€˘ 1.3306: Aug 9th
Japan warned speculators
once again on Friday, that it will be violent against those who buy the Yen. The
price has moved sideways for quite a while now. This leaves a question hanging:
after the intervention, whatâ€™s next? this pair calmed after the Japs stormed it
up! But failure to break 85.89 which we talked about its importance yesterday,
leaves possibilities of downside activity open. All the major Yen pairs jumped
together during yesterdayâ€™s Asian session, gaining more than 2.5% each, which
fueled speculation that the Japs have done it! Shortly after that, in a quickly
arranged news conference, finance minister (Noda) confirmed it and said: â€śyes,
we have intervenedâ€ť! Finally ladies & gentlemen, here is your long awaited
intervention. The Japanese authorities have had it after they saw 82 appears on
the screens for the first time since 1995. A lot of people would now argue that
this is not the time for technical analysis, but the intervention only takes a
short period of time to be completed, then things go back into the hands of the
market powers. This intervention has caused the price to break the falling trend
line from June 4th top on the hourly chart, which resulted in reaching 85. Now,
this surge has a huge barrier in front of it, which is 85.89! This is where the
falling trend line from May 5th top is running currently. If broken, the price
will fly, targeting 86.81 & 87.56. On the other hand, the support is at
84.25, and if broken we will drop to the important 83.73, then
â€˘ 84.25: Fibonacci 38.2% for the short
â€˘ 83.73: Fibonacci 61.8% for the short term.
â€˘ 82.87: Sep 14th low,
and the low for the last 15 years.
â€˘ 85.89: the
falling trend line from May 5th top on the daily chart
â€˘ 86.95: Jul 1st
â€˘ 87.56: Jul 20th
The Pound has touched our
resistance of 1.5278 on Friday, as the high was 1.5727, and it traded below
there the whole time. We have clarified in Thursdayâ€™s & Fridayâ€™s reports the
huge importance of this level. When we investigate the rising move from 1.5295.
When we do, we see that it is a correction for the previous dive from 1.5996,
which topped very close to the Fibonacci 61.8% level. The Pound reached 1.5727,
the highest level since August 11th, whereas the important resistance is at
1.5728 (please refer to the attached chart). The most important level is
definitely 1.5728. This level will determine everything for the medium term. If
we break it, we will literally fly, and if we fail close to it, this pair will
be frustrated and move south. Our resistance of the day is definitely 1.5728. If
broken, we will target 1.5854 & 1.5905. On the other hand, it would sound
bizarre to say that the Pound is weak, and we will not say that. But we do
believe that as long as it is below 1.5728, it will be vulnerable. The first
sign of a failure at 1.5728 will be going back to trade below 1.5660. If this
happens, expect a big drop, targeting 1.5549 &1.5438.
â€˘ 1.5660: the rising trend line from Tuesdayâ€™s low on
â€˘ 1.5549: short term Fibonacci 38.2% resistance.
1.5438: short term Fibonacci 61.8% resistance.
1.5728: Fibonacci 61.8% for the whole drop from Aug 6th top.
â€˘ 1.5854: Aug
â€˘ 1.5905: Aug 2nd & 10th high.
trading analysis written by Munther Marji for
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