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Monday September 27, 2010 - 09:11:01 GMT
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Forexpros Daily Analysis - 27/09/2010
ForexPros Daily Analysis September 27, 2010
The Euro topped at a 5-month high on Friday, hitting
a high of 1.3497, just pips before the important Fibonacci level for
the medium term. Last week, we had analyzed the medium-long term, 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 collapsing and dropping 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:
support is at the Asian session low of 1.3445, and resistance is at the
medium term Fibonacci level of 1.3509.If we take the resistance, then
the trend goes on, and we will target 1.3589 & 1.3690. But a break
of the support will give way to a downward correction targeting 1.3366
â€˘ 1.3445: Asian session low.
â€˘ 1.3366: Fibonacci 61.8% for the rise from 1.3285.
â€˘ 1.3285: Fridayâ€™s low.
â€˘ 1.3509: Fibonacci 50% for the whole massive drop from 1.5143 to
â€˘ 1.3589: Apr 1st & 2nd high.
â€˘ 1.3690: Apr 12th high.
Dollar/Yen retreated from 85.37 which was hit after
rumors of an intervention, but as we said in our last report, this swift
adventure could not be classified as a break of the what was them
important level 85.28. In the wake of the FEDâ€™s statement late
Wednesday, 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 84.03
the Yenâ€™s strength will be subdued. On the other hand, the all important
trend line falling from May 5th top, is currently at 85.21. 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 84.03 or 85.21 is the single most important factor
in determining the direction for the medium and short term. If we break
84.03, 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 85.28 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€˘ 84.03: Fibonacci 61.8% for the short term.
â€˘ 83.33: Sep 8th low.
â€˘ 82.87: Sep 14th low, and the low for the last 15 years.
â€˘ 85.21: the falling trend line from May 5th top on the daily chart.
â€˘ 86.25: Jul 20th high.
â€˘ 86.95: Jul 1st low.
After the marketâ€™s open, the Pound had hit the
highest level since Aug 11th at 1.5843, and that came as a natural
result of breaking the important 1.5728 in the second attempt on Friday.
The technical indicators show a state of â€śoverbnoughtâ€ť which leaves the
possibility of a sharp correction there, but the short term trend is a
rising one after breaking the 1.5728 level. This is why we strongly
recommend not to pick sides today before breaking the specified support
or resistance, and we believe that the short term direction will not
show itself before a break! Short term support is provided by the 38.2%
Fibonacci level of the micro-term at 1.5765. If this level is broken ,
we will drop to more important Fibonacci level at 1.5673 &1.5632. On
the other hand, the top of the rising channel from Sep 21st low on the
hourly chart could tackle this rise, but if it gives way then the party
will continue! The top of the channel is at 1.5871, and if broken we
will jump to 1.5965 & 1.6000.
â€˘ 1.5765: Micro term Fibonacci 38.2% level
â€˘ 1.5673: short term Fibonacci 50% support.
â€˘ 1.5632: short term Fibonacci 61.8% support.
â€˘ 1.5871: the top of the rising trend channel on the hourly chart.
â€˘ 1.5965: Aug 3rd high.
â€˘ 1.6000: psychological level.
trading analysis written by Munther
Marji for Forexpros.
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