ForexPros Daily Analysis July 14, 2010
Fundamental Analysis: Initial Jobless Claims
Initial Jobless Claims is a seasonally adjusted measure of the number of people who file for unemployment benefits for the first time during the given week. This data is collected by the Department of Labor, and published as a weekly report.
The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.
On a week-to-week basis, claims are quite volatile.
Usually, a move of at least 35K in claims, is required to signal a meaningful change in job growth.
A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD. This week analysts expect a figure of 449.00K.
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Euro Dollar
The Euro broke the resistance specified in yesterday’s report 1.2601, and jumped sturdily as it was expected after this break, stopping only a couple of pips before our suggested target 1.2737 (yesterday’s high was 1.2735), in what indicates just how important this target/resistance area is. Technically, the most important event of the past 24 hours was a new touch of the top of the rising channel on the hourly chart, as if the Euro is seeking to score a record in how many times it is touching its channel. This clearly shifts all lights to the top of this channel, this area deserves our absolute attention, The Euro & the Dollar, are both in a “make it or break it” situation! The importance of (at least) the 4th test of this channel top is absolutely enormous, it is the single most important factor in determining medium term direction: from here we will see the Euro soaring for hundreds of pips, of the Dollar dragging it down for hundreds of pips. Short term resistance is at yesterday’s top 1.2735, if broken, we will quick-jump to 1.2801, and may be then 1.2888. The support is at 1.2691, and a decisive break here will indicate that we are drifting away from the channel top, and will most probably lead to a hard fall to 1.2552, and may be 1.2442.
Support:
• 1.2691: important intraday level.
• 1.2552: last Wednesday’s low.
• 1.2442: May 18th high.
Resistance:
• 1.2735: yesterday’s top.
• 1.2801: May 11th high.
• 1.2888: April 20th low.
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USD/JPY
In what seems like a hint that the Dollar is going on with its rising correction, the USDJPY jumped and broke the resistance specified in yesterday’s report 88.76, touched 89 as it topped at 89.09 during the Asian session. In spite of the shooting star pattern on the daily chart, we believe that the Dollar is trying to reach Fibonacci 50% of wave 3. And we still believe as well that the wave count we introduced last week is providing us with the most probable scenario: we are in a wave 4 correction (please refer to the attached chart). Short term resistance is at 89.09, and breaking it would mean that the Dollar will continue to capitalize its latest bounce, which will ideally target Fibonacci levels for wave 3: 89.52 & 90.13. Support is at 88.42, and breaking it would indicate a continuation of the drop to 87.35 & 86.47. This pair is going as expected, in the expected direction, and in convergence with our negative technical outlook for the medium term. We absolutely expect the fall to continue on the medium term. But we should not neglect the enormous possibilities of a bounce up targeting Fibonacci levels: a bounce is highly probable, and it is most likely to be just a temp, but the trend is down without a shadow of a doubt!
Support:
• 88.42: short term 61.8% Fibonacci level.
• 87.35: an obvious support area on the hourly chart, and Dec 9th 09 low.
• 86.47: previous well known support.
Resistance:
• 89.09: Asian session top.
• 89.52: Fibonacci 50% for the wave 3 dive (from 92.09).
• 90.13: Fibonacci 61.8% for the wave 3 dive (from 92.09).
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Forex trading analysis written by Munther Marji for Forexpros.
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