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Thursday September 30, 2010 - 09:35:26 GMT
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Forexpros Daily Analysis - 30/09/2010ForexPros Daily Analysis September 30,
Euro DollarThe Euro
broke the resistance specified in yesterdayâ€™s report 1.3589,only to stop on the
middle if the road between this level and our suggested target of 1.3690,
topping at a new 5-month high of 1.3644. Then, this pair suffered an 80+ pips
setback, which could put it under considerable pressure, if it breaks the
important short term support levels below 1.36. The first of these support
levels is 1.3543, which if broken will force us to put all our attention at the
all important 1.3481. This is the level to watch for today, because a break here
will be a declaration of a strong falling correction, that is supposed to
correct the whole massive move up from 1.2643, which may stop now after
achieving 1000 pips of gains. On the other hand, the resistance is at 1.3624,
and if broken, the Euro will continue to fly, and will immediately target
1.3717, then at a later time may be will witness a test of the unforgettable top
1.3816. Now letâ€™s take a look at the medium term analysis. Breaking 1.3509 on
Tuesday was a solid confirmation of the righteousness of our medium term
outlook. 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
(where 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. Keep in mind that breaking 1.3509 confirms this analysis, and
it supports the idea that we are heading to the target area suggested in the
medium term analysis.
â€˘ 1.3571: important intraday
level, protecting the short term Fibonacci 38.2% level which is at 1.3543.
1.3481: Fibonacci 61.8% for the rise from 1.3380, and the rising trend line from
Sep 10th low on the hourly chart. The single most important support level for
the current time.
â€˘ 1.3332: the massive top of Aug
â€˘ 1.3624: the falling trend line from
yesterdayâ€™s top on the intraday charts.
â€˘ 1.3711: Feb 8th high.
the unforgettable top of Mar 17th.
hardly any change to the technical outlook, it is completely negative after
breaking 84.03 which was under our spotlight for several days. It was broken on
Tuesday, and we have seen the Yen dragging the Dollar to 83.18 so far. This
break opened the door wide for a test, and most probably a break, of the 15-year
low 82.87. We believe that getting there is only a matter of time. As you
probably remember, the importance of 84.03 comes from the fact that it is the
61.8% Fibonacci level for the rise from the 15-year low of 82.87 to the
post-intervention top 85.91, therefore, it is the â€śguardianâ€ť of the 15-year
bottom. This makes breaking 84.03 the first step in breaking 82.87, and reaching
fresh 15-year lows. But the question is will this drop be fast, and we see these
levels relatively soon, letâ€™s say before the weekend? Or will it be a slow drop
that will consume many days to get there? Short term support is at 85.18, and if
broken, the drop will go on, and target areas below 83, we love 82.87 &
81.80 most of them. Short term resistance is a bit far, and it is at 84.48. If
broken, we will shoot up to 85.91 & 86.95, very unlikely at the moment,
unless we have an intervention.
â€˘ 83.18: Asian session
â€˘ 82.87: Sep 14th low, and the low for the last 15 years.
the trend line combining the monthly bottoms of Dec 2008, Jan & Nov 2009,
after adjusting it slightly.
â€˘ 84.48: the falling
trend line from May 5th top on the daily chart.
â€˘ 85.91: Sep 16th high.
86.95: Jul 1st low.
we offered you yesterday at 1.5880 proved that it deserved the attention we
poured on. It managed to stop the rising move yesterday morning, as it failed to
break it, and stopped only 7 pips before it (yesterdayâ€™s high was 1.5873). The
reaction from this important resistance saw the Pound dropping back again below
1.58, which could be a signal that an overdue correction is about to begin!
Technically speaking, breaking 1.5871 on Tuesday is definitely a positive sign,
indicating strength. It was the second positive sign after breaking 1.5728 last
week. Today, we will keep our important resistance at 1.5880, this level could
give the green light to moving higher, or decline this attempt. We still believe
that breaking this level or failing at it is the single most important factor
determining the short term direction. If we break 1.5880, the Pound will not
settle for less than 1.60 seen for the first time in months! And may be later
1.6075. On the other hand, failure here will give the Dollar a chance to
breathe, and go back down to test 1.5815. If broken, the Pound will suffer a
downward correction, targeting Tuesdayâ€™s low first 1.5718, then the very
important support at 1.5575.
â€˘ 1.5815: important
â€˘ 1.5718: Yesterdayâ€™s low.
â€˘ 1.5575: Aug 30th
â€˘ 1.5880: important intraday level.
1.6000: psychological level.
â€˘ 1.6075: Jan 22th
---Forex trading analysis written by Munther Marji for
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