Friday July 9, 2004 - 13:30:11 GMT
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Daily Forex Commentary by Global Forex Trading
Daily Commentary By Cornelius Luca, GFT Forex Analyst
The dollar made only a weak recovery versus the yen and the pound but climbed further against the euro and the Swiss franc on Thursday. The dollar remains oversold in the short term, but the downtrend is strong, so only buy it only if its recovery is confirmed.
Euro/dollar reached a new four-month high of 1.2405 on Thursday and this unabated strength broke the top of its slowly rising channel.
Above 1.2405, the pair still has resistance at 1.2433. This level should be able to cap any further demand on the day. However, a break higher would signal an upmove to 1.2540. Distant resistance remains at 1.2710.
Any pullback would face support at 1.2338 and a break lower would target 1.2265. A move lower would signal the end of the rally. Below 1.2240, support is still seen at around 1.2160. A break lower to the 1.2100 area, but this slide would be very unexpected.
Oscillators are rising.
Dollar/yen managed to recover some of its Wednesday’s losses, as expected, but failed to close above the 20-day moving average, now at around 108.85. Only a close higher would add confidence to this recovery.
The key resistance level to watch remains the 109.15 pivot, which targets 109.65 and 108.65.
Any additional strength would once again face a strong obstacle between 109.65 and 109.71. A move to the 110.00 area remains difficult.
Below 108.16, dollar/yen now faces further support at 108.00. Key support is at 107.95 from a 50-point pivot that targets 107.45 and 108.45.
Oscillators are mixed.
MEDIUM-TERM: Slightly bearish
Sterling/dollar fell from a new three-month high of 1.8584 on Thursday. The previous rally remains overdone and there is a good chance that the pair will sell off further. However, it remains above the neckline of an inverse head-and-shoulders formation, which is targeting the 1.9400 area.
The pair has initial support at 1.8465 and a break lower would signal a decline to 1.8390. If the decline accelerates, then look for a test of the 1.8345 and 1.8275 levels.
Above 1.8584, the sterling/dollar has resistance from the 1.8603 level. A break above this level signals a rally to 1.8747.
Oscillators are rising.
MEDIUM-TERM: Slightly bullish
LONG-TERM: Slightly higher
Dollar/Swiss franc still remains under general selling pressure after falling further to a new 4 1/2-month low on Thursday.
If the decline continues, the pair should break the support at 1.2230 and accelerate this decline toward 1.2180. If this level also breaks, then look for a test of the further support at 1.2160, which is the target of head-and-shoulders formation. A decline to 1.2138 is unlikely.
The pair has resistance at 1.2360 and a break higher would signal an upmove to 1.2420. That’s followed by 1.2490 and a break higher signals a re-test of the 1.2570 area.
Oscillators are falling.
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
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