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Wednesday September 22, 2010 - 09:42:38 GMT
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Forexpros Daily Analysis - 22/09/2010
ForexPros Daily Analysis September 22, 2010
The Euro broke the resistance specified in yesterdayâ€™s reports 1.3118,
after two days of trying, and successfully reached both targets 1.3194
& 1.3306 with accuracy as well (the high at the moment of preparing
this report is 5 pips above our 2nd target at 1.3311). The Euro broke
the above mentioned resistance early yesterday, but it was not until the
FED issued its statement that it literally â€śexplodedâ€ť in the face of
the Dollar! Reaching 1.33 once again has pushed us to revisit the long
term analysis, and after doing all the necessary analysis using
classical technical analysis, Elliot & Fibonacci, we found that most
probably the first leg up from 1.1875 to 1.3332 is wave A of a 3-wave
correction up. We also found that, most probably, the drop which
followed is wave B, which stopped at Fibonacci 50% level of wave A with
not-so-well kind of accuracy as it bottomed at 1.2586 whereas the
Fibonacci level was 1.2604. If this move has stopped closer to the
Fibonacci level, we would have expected this current rise from the first
step it took around 1.26. So, currently, we are in wave C, which will
ideally target the equality level (were wave A = wave C) which is at
1.4043, or the Fibonacci 61.8% level for the massive drop from 1.5143 to
1.1875 which is at 1.3895, or the top of the rising channel on the
daily chart, which is currently at 1.3794 and will rise with time. This
leaves the area between 1.3895 & 1.4043 as the proffered target area
for this wave. We do believe we are heading there on in a matter of
weeks. We expect to reach the target area by December, which is a month
famous for introducing medium & long term tops for EURUSD. From
there we could see the Euro collapse and drop to areas below 1.18, but
it is too early to talk about this issue now, and we will leave the next
stage discussion to a more appropriate time. Back to short term
analysis: resistance is at 1.3332, if broken then this rally will go on,
and will target 1.3414 then a very important Fibonacci level at 1.3509.
Support is at 1.3284, and if broken a correction is due, with ideal
targets at 1.3203 & 1.3135.
â€˘ 1.3284: important intraday level which was formed after the FED.
â€˘ 1.2203: Fibonacci 38.2% for the rise from 1.3027.
â€˘ 1.3135: Fibonacci 61.8% for the rise from 1.3027.
â€˘ 1.3332: Aug 6th top.
â€˘ 1.3414: Apr 27th high.
â€˘ 1.3509: Fibonacci 50% for the whole massive drop from 1.5143 to
Finally, some movement in this â€śdeadâ€ť pair! After the Fed last night, we
broke below 85 for the first time after the intervention took us above
it. We dropped to 84.94 immediately after the Fed, and then to 84.76
during the Asian session. But even after this move, the technical
outlook has hardly changed, but speculators have! Dropping below 85
could mean that they are no longer fearful of the Japs, and they are
ready for another round with them! But before breaking 84.25 the Yenâ€™s
strength will be subdued. On the other hand, the all important trend
line falling from May 5th top, is currently at 85.49. The price has
tried several times to break this line in the past few days without
success. The Dollar needs to break this line in order to keep going.
Simply said, breaking 84.25 or 85.49 is the single most important factor
in determining the direction for the medium and short term. If we break
84.25, this means that the speculators have launched a new attack on
the Japanese authorities, and that price will target the important 83.73
then 82.87. But, if the price managed to break 85.49 somehow, the
technical outlook will change dramatically, and we will be heading to
the important levels above 86, most important to us are 86.25 &
â€˘ 84.25: Fibonacci 38.2% for the short term.
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€˘ 85.49: the falling trend line from May 5th top on the daily chart
â€˘ 86.25: Jul 20th high.
â€˘ 86.95: Jul 1st low.
In spite of the FED, in spite of the Euro soaring to 1.33, and the Swiss
Franc breaking above parity with the Dollar, the Pound did not break,
or even test 1.5728. This charming resistance will still be our most
important level for now, there is nothing more important. The Pound
jumped strongly (As everybody else did) after the FED, breaking through
1.56 and topping very close to 1.57 (the high at the moment of preparing
this report is 1.5697). But , even with all this action, the technical
outlook will not change before breaking 1.5728. Currently, and as we
said in previous reports, we do not say that the Pound is weak, but it
is surely vulnerable as long as it is trading below 1.5728, it could
collapse any minute! Only a break of 1.5728 will change this sad status,
and if we get this all important break, we will soar to 1.5854 first,
then to 1.5906. On the other hand the support is at 1.5662, and a break
here will initiate a correction for yesterdayâ€™s spike, targeting the
important 1.5576 first, then 1.5448.
â€˘ 1.5662: the rising trend line from todayâ€™s low on intraday charts.
â€˘ 1.5576: short term Fibonacci 61.8% support.
â€˘ 1.5448: Sep 15th low, a well known support area.
â€˘ 1.5728: Fibonacci 61.8% for the whole drop from Aug 6th top.
â€˘ 1.5854: Aug 4th low.
â€˘ 1.5906: Aug 10th important top.
trading analysis written by Munther
Marji for Forexpros.
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