Forexpros.com Daily Analysis - 23/08/2010

Free webinar on ForexPros - Trend. How to spot it and how to trade it.

Support and resistance levels

Expert: Stoyan Mihaylov

When: Today, Aug 23, 2010, 11:00 GMT

It is a common belief, that "The trend is your friend". In order to profit

from the trend you have to be able to spot it on the chart, recognize the

time-frame it is derived from and to define all the important support and

resistance levels. Walking with the trend is an easy and simple way to

follow the market , which is the essence of the TA phenomenon.

In this online webinar you will be able to participate actively in the

discussion and to ask the questions you're interested in.

The webinar will be conducted by Stoyan Mihaylov - financial analyst at

Deltastock AD.

Click here to join free

---

Fundamental Analysis: Existing Home Sales

The Existing Home Sales measures the annualized number of existing

residential buildings that were sold during the previous month. This report

helps to analyze the strength of the US housing market, which helps to

analysis the economy as a whole. 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 4.75M.

---

Euro Dollar

As expected, the Euro landed hard after breaking the support we specified in

Friday's report 1.2791, dropping more than 125 pips, and stopping only 3

pips before meeting our target @ 1.2660. With this new extension to the

medium term drop from 1.3332, the size of this drop has become enormous, and

cannot be ignored. Last week, we suggested a wave count with 5 complete

waves up from 1.1875. But, until this moment, we have not reached but only

the first Fibonacci retracement level for the 5-wave move at 1.2775.

Therefore, in spite of the size of this drop, we highly doubt that it has

shown all its cards. We believe this drop is capable of reaching Fibonacci

50% at least, or even go lower than that. But, what increases the risk in

these areas, is that after such a huge move, the Euro is subject to a

correction at any time, and from any level. Short term support is at the

Asian session low 1.2688. A break here would be a confirmation that we are

heading to Fibonacci 50% at 1.2604, and at a later time 1.2522. On the Other

hand, resistance is at 1.2791, this pair cannot continue achieving gains

unless we break the resistance 1.2791. In case we get this break, we will be

heading to 1.2919 & 1.2998.

Support:

* 1.2688: Asian session low.

* 1.2604: Fibonacci 50% for the whole rise from 1.1875 to 1.3332.

* 1.2552: Jul 13th low.

Resistance:

* 1.2791: the falling trend line from Aug 6th high on the intraday chart.

* 1.2919: Fibonacci 38.2% level for the drop from the 3-month high of

1.3332.

* 1.2998: Fibonacci 50% level for the drop from the 3-month high of 1.3332.

---

USD/JPY

The Dollar/Yen did not break the support or the resistance specified in

Friday's report. It traded in a very dull range of almost 55 pips, and we

are still waiting for a break bringing some excitement to this pair. Let's

leave the daily & weekly charts we have been obsessed with lately, and just

focus on the hourly chart. We can see that there is a very exciting trend

line, dropping from June 4th top. This line is running currently at 85.80.

Therefore, all of our attention is at the exciting trend line & the

importance it provides. As long as we are trading below this line, the

downtrend will be ok, but if we break the resistance 85.80 we will shoot up

targeting 87.00 and may be 87.70. The support is provided by an important

intraday support at 85.18. If broken, we will target 84.70 first, and there

will be nothing stopping the price from reaching our awaited target 83.87,

except for the BoJ.

Support:

* 85.18: important intraday level.

* 84.70: This year's low, and the lowest level since 1995..

* 83.87: Fibonacci extension level 138.2% for the falling wave from 86.86,

compared to the wave which started at 88.10.

Resistance:

* 85.80: the falling trend line from June 4th top on the hourly chart.

* 87.00: Jul 7th low.

* 87.70: June 26th top.

---

Forex Trading Analysis written by Munther Marji for ForexPros. For more information about forex news visit 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.