Free webinar on ForexPros - Mapping Out the Banking System & Foreign Exchange Dealing Process, Part II.
Expert: Dan Cook
When: Wed, Feb 24, 2010, 11:00 EST
In the second installment of the Webinar ‘Mapping Out the Banking System & Foreign Exchange Dealing Process’, Dan Cook will take a deeper dive into the Foreign Exchange Market. Cook will start by discussing the interbank system and how it differs in form and functionality to the centralized exchange models used for trading stocks and commodities. From there, he will focus on broker-level dealing and discuss how retail brokers, whether ECN's or Dealing Desk models, make money.
Cook will also take an inside look at dealing desks and speak frankly about the roles and responsibilities of a retail dealing desk, which will include an overview of how brokers hedge currency exposure. The goal of this Webinar is to help traders understand the nuances of the Forex market by shedding light on many of the aspects of currency trading that have previously been shrouded in mystery.
Click here to join free.
Fundamental Analysis: German CPI
European traders look forward to the publication of the German Consumer Price Index (CPI) tomorrow, February 9. The index measures the changes in the price of goods and services.
The CPI measures price change from the perspective of the consumer.
It is a key way to measure changes in purchasing trends and inflation in Germany. A higher than expected reading should be taken as positive/bullish for the EUR (as the common way to fight inflation is raising rates, which may attract foreign investment), while a lower than expected reading should be taken as negative/bearish for the EUR. Analysts predict no change in the future reading, a rate of -0.60%.
The Euro came very close to the 4-hour channel on Friday, after breaking the support specified in the report, and the drop stopped only 2 pips before the first suggested target 1.3852. With this move taking us close to the channel bottom, and then a fast bounce reaching 1.3666, the odds of an upside correction remains present, but we need a break of 1.3666 before we can say the odds favor that. Short-term resistance is at 1.3666, and breaking it would indicate that the price is already moving higher after the drop we witnessed last week, even if that was only for a short term correction. The targets for such a correction would be 1.3752 & 1.3805. While the support is at 1.3620, and breaking it would bring back Friday’s target under the spotlight: 1.3582 & 1.3516.
• 1.3620: the falling trend line drawn from Jan 21st bottom (1.4027) on the hourly chart.
• 1.3582: Apr 6th high.
• 1.3516: Apr 2nd high.
• 1.3666: short term resistance.
• 1.3752: Fibonacci 38.2% for the last drop from 1.4025.
• 1.3805: Fibonacci 50% for the last drop from 1.4025.
The Pound dropped in a free fall after breaking the support specified in Friday’s report 1.5690, and reached the target 1.5614 successfully. This morning, a new bottom was reached at 1.5532. It seems that this sharp trend is not tired yet, especially after breaking the falling trend channel to the downside, which contributed to this sharp drop. Thus, we will maintain a negative outlook, as long as the price is trading below the bottom of the channel which is at 1.5704 currently. And even though the price is far from this level at the moment, we will consider this to be resistance of the day, and only if it is broken that we will change our long held negative outlook. If this surprise happens, and we break 1.5704 we will target short term Fibonacci retracement levels 1.5800 & 1.5862. As for the support it is at the nearby 1.5543, and breaking it would indicate that this Dollar tornado will not stop soon, targeting 1.5445 & the important 1.5350.
• 1.5543: intraday support.
• 1.5614: Nov 28th 2008 high.
• 1.5512: May 12th high.
• 1.5704 the bottom of the falling broken trend channel.
• 1.5800: Fibonacci 50% for the last drop from 1.6067.
• 1.3863: Fibonacci 61.8% for the last drop from 1.6067.
Forex Trading Analysis written by Munther Marji for ForexPros.
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