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Forexpros Daily Analysis - 10/08/2010

Discussion in 'Forex Daily News & Outlook' started by forexpros2, Aug 10, 2010.

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    ForexPros Daily Analysis August 10, 2010


    Free webinar on ForexPros - How to Objectively Use Sentiment in Your Forex
    Trading to Start Winning
    Expert: Kris Matthews
    When: Thu, August 12, 2010, 11:00a.m. GMT

    Have you ever put a trade on after seeing the market run nicely in one
    direction only to see the market immediately move in the opposite direction?
    Do you find that getting the direction right is something you need to take
    care of? What most traders tend to forget is that the market is not made up
    of charts and economic data, but rather human beings. Thus the most powerful
    driving force in the forex market is sentiment. Kris Matthews shows us in
    Part 1 of a four part series how to objectively use sentiment to get your
    direction right and increase your win rate.


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    ---

    Fundamental Analysis: Trade Balance

    The Trade Balance index measures the difference in worth between exported
    and imported goods (exports minus imports). This is the largest component of
    a country's balance of payments.
    Export data can give reflection on the US growth. Imports provide an
    indication of domestic demand. Because foreigners must buy the domestic
    currency to pay for the nation's exports, it may have sizable affect on the
    USD. A higher than expected reading should be taken as positive/bullish for
    the USD, while a lower than expected reading should be taken as
    negative/bearish for the USD. The analysts predict a future reading of
    -42.50B.

    ---

    Euro Dollar

    In an obvious concern about the uptrend, yesterday's headline was "The whole
    short-term uptrend at stake", and so it happened. The Euro broke the support
    specified in yesterday's report 1.3265, and successfully reached the first
    suggested target 1.3195, and even came close to the second suggested target,
    stopping only a few steps before hitting it. Technically, what is really
    important is that we have, and without any room for doubt, broken a very
    important trend line: the ascending trend line from June 29th low on hourly
    the chart, at 1.3194. Therefore, the technical outlook has completely
    changes the minute this line was broken. The Euro is left vulnerable for
    severe losses, which we have seen almost 60 pips of which until the moment.
    But we highly doubt that this is it, and we strongly believe that this pair
    will continue moving south in the shadow of a technical outlook which
    changed radically yesterday. Short term support is at 1.3133, if broken, the
    price will drop to 1.3026, then to a very important medium term level at
    1.2961. On the other hand the resistance is at 1.3233 and only with a break
    here that the dark outlook will be changed! If this happens, a strong jump
    to 1.3347 is to be expected, and may be later we will see 1.3442.

    Support:
    * 1.3133: Asian session low, which is only 3 pips above a well known support
    level.
    * 1.3026: Jul 20th high.
    * 1.2961: Fibonacci 61.8% for the whole rising move from 1.2731 to Friday's
    & 3-month high.

    Resistance:
    * 1.3233: the retest level for the broken trend line.
    * 1.3347: May 3rd unforgettable top.
    * 1.3442: Feb 19th important low.

    ---

    USD/JPY

    The Dollar/Yen did not break the support or the resistance specified in
    yesterday's report yesterday, but it tried to break the resistance 85.89 a
    few hours ago during the Asian session. With this, we see a continuation of
    the correction from Friday's low, after hitting another, lower target for
    the downward wave we have been talking about for weeks, , but what are the
    next targets? In the attached chart, which is a weekly one, we can see the
    falling channel from Sep 07 top. Although the bottom of this channel is very
    far away, and is just above 74, but there is an interesting trend line
    inside it, combining the monthly lows of Dec 08, Jan & Nov 09. This line is
    around 82.65 currently, providing us with a perfect target for this dropping
    wave, since we still expect, as we did before, that it will dive below
    84.81. Therefore, we expect the price to reach this target, and as we do, we
    also realize that the limited volatility of this pair indicates that this
    will take some time. As for the short term, the support is at 85. 78, and
    breaking it would indicate that we are already moving lower with the
    objective of breaking 84.81, and reaching lows not seen in 15 years. This
    will target 83.87. The resistance is at 86.43, and if broken, the price will
    continue its bounce, targeting 87.49 & the important 88.10.

    Support:
    * 85.78: the bottom of the rising corrective trend channel on the hourly
    chart.
    * 84.81: Nov 27th 2009 & a 15-year low.
    * 83.87: Fibonacci extension level 138.2% for the falling wave from 86.86,
    compared to the wave which started at 88.10.

    Resistance:
    * 86.43: the top of the rising corrective trend channel on the hourly chart.
    * 87.49: Jul 29th high.
    * 88.10: Jul 28th high.

    ---


    Forex trading analysis written by Munther Marji for Forexpros.

    ---

    Disclaimer:

    Trading Futures and Options on Futures and Cash Forex
    transactions involves substantial risk of loss and may not be suitable for
    all investors. You should carefully consider whether trading is suitable for
    you in light of your circumstances, knowledge, and financial resources. You
    may lose all or more of your initial investment. Opinions, market data, and
    recommendations are subject to change at any time.
     
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