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Forexpros.com Daily Analysis - 07/10/2009

Forexpros Daily Analysis Oct 7, 2009


Euro Dollar

The Euro advanced to 1.4761 before retreating back to 1.4682, and with that, it stayed for the whole past 24 hours above the important support specified in yesterday's report 1.4668, keeping our positive outlook intact. But even with this new high, things have changed a lot, because the Euro is threatened with a correction for the whole move from 1.4480, after spotting reversal signals on the Japanese candlestick charts: a (Shooting Star) pattern on the hourly chart, and an (Engulfing) pattern on the 4 hour chart. That is why we will drive our attention towards Fibonacci retracement levels for the move from 1.4480 on Friday to 1.4761 yesterday. But, we will not assume there is a correction underway, before trading below the moving average SMA50, which clearly supported the price since Friday, and is running currently at 1.4682. As long as the price is above the moving average, we will maintain a positive outlook for the short-term, and we believe that there will be another attempt to break 1.4720 and head higher. And although we notice a resistance at 1.4776, we believe that if the Euro breaks 1.4720, then it will be able to reach areas above 1.48 within 24 hours after the break, first of which is 1.4824, then new highs above the tops of September 22nd & 23rd.

Support:
• 1.4682: the moving average SMA50, supporting the Euro since Friday.
• 1.4621: Fibonacci 50% for the rise from 1.4480 on Friday to 1.4761 yesterday.
• 1.4587: Fibonacci 61.8% for the rise from 1.4480 on Friday to 1.4761 yesterday. In case this support is broken, 1.4509 will be a key support for the medium-term.

Resistance:
• 1.4720: the resistance area that stopped the Euro from rising 3 times lately.
• 1.4776: previous well known resistance.
• 1.4824: previous daily high.

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USD/JPY

Dollar-Yen has tried to break the lower limit of the supposed triangle pattern, but it was not able to overcome Friday's low, if we are to receive a confirmation of the break of the triangle we need to see the price below Friday's low 88.59. That is why this support is the most important for today. On the other hand, the resistance of the day is the upper limit of the triangle formation 89.63. And breaking either of them is what will give the next move its direction. If we break 89.63, short-term direction will be up, which would give a chance to approach 91 since the first important resistance in this area is the limit of the downtrend 90.55, which represents the falling trendline from August 9th top. Just below it there is the moving average SMA10. There are several resistance levels between here and the strong 91.63. On the other hand, if we break 88.59 that would mean we are on our way to break the 8-month low at 88.22, in this case 87.97 and 87.10 look like the most possible targets of the next leg down.

Support:
• 88.59: Friday's low.
• 87.97: Jan 23rd low.
• 87.10: 2009 low.

Resistance:
• 89.63: the upper trendline in the supposed triangle pattern, most important resistance for the short-term.
• 90.55: the falling trendline from Aug 9th top.
• 91.63: strong previous resistance.

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