ForexPros Daily Analysis July 20, 2010
Fundamental Analysis: Fed Chairman Bernanke Testifies
Ben Bernanke, US Federal Reserve Chairman, will be testifying in Washington DC, regarding America’s economic outlook and financial markets.
His comments may determine a short-term positive or negative trend.
—
Euro Dollar
Although the Euro broke the support specified in yesterday’s reports 1.2889, but it did not reach or even come close to the suggested target 1.2820, as if it was still not ready to drift away from 1.30 yet. On Friday, the Euro topped at 1.3005, just 8 pips above the resistance that captured all of our attention: 1.2997. This shows just how important this resistance is, which is probably the level most qualified to turn the Euro around, and resize this soaring move into a correction! This strong & sharp jump is a natural fruit of breaking the top of the channel after touching it for a record number of times, but eventually the Euro managed to break it! After that serious barrier, the energized Euro had faced even a harder one: Fibonacci 61.8% for the giant move down from 1.3690 to 1.1875. This level is at 1.2997, and will act as a heavy weight barrier in the face of this rise, which in spite of the fact that it has achieved more than 1000 pips so far, it still looks corrective (simply because it did not break the divine ratio 61.8%). Now, even after a drop of more than 130 pips from Friday’s top, 1.2997 will still be the most important resistance in the neighborhood, only a break here means more gains. If broken, we will soar above 1.30 for the first time in more than 2 months, and we will target 1.3092 & 1.3153. On the other hand, the support has shifted dramatically to 1.2952, breaking it would indicate that we are drifting away from 1.2997. And that will target 1.2820 & 1.2764.
Support:
• 1.2952: the rising trend line from Jul 13th low.
• 1.2820: Fibonacci 38.2% for the short term.
• 1.2764: Fibonacci 50% for the short term.
Resistance:
• 1.2997: Fibonacci 61.8% for the massive dive from 1.3690 to 1.1875.
• 1.3092: May 10th high.
• 1.3153: May 3th low..
—
USD/JPY
After the Yen’s strength penetrated the lows of last December & January, we were left with no notable support protecting the 15-year low which was reached last November at 84.81! We will not be a bit surprised if this pair started to move in that direction, and tried to break that low! On the contrary, we have been expecting this for weeks now, and it was included in our reports several times. But, signs show that the possibility of a rising correction is growing, to correct the drop from Wednesday’s top 89.09 to Friday’s low 86.25. On the top of these signs: the inverted hammer formation, which appeared on the daily chart. Therefore, and even though we are negative about this pair on the medium term, we should not neglect these signs which force themselves upon us for today! Short term support is at 86.78, and if broken, the price will continue searching for new lows, targeting 85.84, then the 15-year low 84.81. Resistance is presented by the falling trend line from Wednesday’s tops, which is at the first Fibonacci level 87.33, if broken we will ideally target short term Fibonacci level 88.01 & if broken a quick jump to 88.64 is to be expected.
Support:
• 86.76: the rising trend line from yesterday’s low.
• 85.84: Nov 30th low.
• 84.81: Now 27th low, and the lowest level since 1995!.
Resistance:
• 87.33: short term Fibonacci 38.2% level.
• 88.01: short term Fibonacci 61.8% level.
• 88.64: the falling trend line from Jun 4th on hourly chart.
—
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.