ForexPros Daily Analysis July 26, 2010
Fundamental Analysis:CB Consumer Confidence
The Consumer Confidence measures the level of consumer confidence in
economic activity. It is a leading indicator as it can predict the consumer
spending, which is a major part in the total economic activity. Higher
readings point to higher consumer optimism. 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 51.00.
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Euro Dollar
The Euro fluctuated violently on Friday, breaking both the support &
resistance specified in the report, but only reaching the target in the case
of the support. After breaking 1.2860, the Euro reached the first suggested
target 1.2807 successfully. When looking at the hourly chart, we find that
Friday’s dive has stopped at the bottom of a new rising channel which will
be placed under our focus for today. The bottom of the channel is at 1.2807,
but after the strong bounce we seen late Friday, the price built another
support ahead of the channel bottom at 1.2883. In case we break today’s
support (1.2883) we will drop to test the bottom of the channel at 1.2807 as
a first target. And if this one is also broke, then the rising channel is
broken, which would leave the Euro vulnerable to more downside activity,
targeting 1.2731 as a first & immediate target for this break on the way to
lower targets. On the other hand, the resistance is at the important 1.2942.
If broken, the price will resume its bounce from channel bottom, targeting
yet another test of 1.3026, and may be then 1.3075.
Support:
* 1.2883: the rising trend line from Friday’s low on intraday charts.
* 1.2807: the bottom of the rising trend channel on the hourly chart.
* 1.2731: yesterday’s low.
Resistance:
* 1.2942: Asian session top, and the falling trend line from last weeks top
on the hourly chart.
* 1.3026: Tuesday’s & 2-month high.
* 1.3075: Fibonacci 61.8% for the drop from 1.3816 to 1.1875.
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USD/JPY
As we have said several times in last week’s reports, signs show that the
possibility of a rising correction to correct the fall from June 3rd top
89.09 to July 16th low 86.25 is growing. On the top of these signs: the
inverted hammer formation, which appeared on the daily chart, and the
completed 5-wave move, and further more what looks to be the corrective
waves (a) & (b) forming in an ideal manner (please refer to the attached
chart), and wave (c) developing in an ideal fashion. 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 87.33, and if broken, the price will resume its drop after a
3-wave correction, targeting 86.72 & 85.84. Resistance is at 87.67. A break
here indicates that the odds of c continuation of the correction of the 5
waves down from 92.87 are still massive. This will target 88.37, then 88.78.
It is worth mentioning that breaking wave 5 bottom 86.25 even with a few
pips would strongly indicate the termination of the correction we are
currently living.
Support:
* 87.33: the rising trend line from Thursday’s low on the hourly chart.
* 86.72: Friday’s low.
* 85.84: Nov 30th 2009 low.
Resistance:
* 87.67: important hourly resistance, stopped the price several times after
the open.
* 88.37: Jul 12th low.
* 88.78: Fibonacci 38.2% level for the whole drop from 92.87 (the 5 waves
down).
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Forex trading analysis written by Munther Marji for Forexpros.
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