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The Euro held above the suggested support 1.4501 and rallied to a new top for this trend at 1.4650, which is still inside the suggested area for a top. The top of the channel is currently at 1.4682 and this will be a curtail resistance, that could stop the current rise and force a correction of good size. We favor the formation of a top in these areas as long as the Euro does not break the top of the channel decisively. After that we expect a move down to areas below 1.45. The only thing that could save the Euro from a sizable drop is a clear break above the top of the current channel. The previous 1.4570 resistance will act as the most important support for short-term, and breaking it means the correction is back on track, and is heading to 1.4459 at least, in the next few days.
- 1.4570: short-term support.
- 1.4501: Thursday's low.
- 1.4459: Fibonacci 38.2% retracement level for the whole move up from 1.4190.
- 1.4682: the top of the current channel on the hourly chart.
- 1.4720: the unforgettable top of December 2008.
- 1.4774: previous well known resistance/support.
As this report expected yesterday, the dollar-Yen moved up slightly in a small correction. Our view is still as it was in yesterday's report when we said: after the plunge from 92.38 last week to 90.19 this morning, the possibility of a correction ahead of 90 is growing. Such a correction could go up to 91.74 (Fibonacci 50% retracement, SMA100 on the hourly chart & the previous important support 91.73-91.76). Or, it could even go to 92.10 (Fibonacci 61.8% retracement, and the descending trendline from last month's peak). The only changes to this view are that the descending trendline is now below Fibonacci 61.8%, and that the SMA100 is almost exactly at Fibonacci 38.2%. In order for the downtrend to continue without major difficulties, we should not go higher than these levels. We still believe that we are heading towards areas below 90 after this correction is over, such as the important support area 89.68/78. On the other hand, the rising trendline for this correction is currently at 90.90, which makes it the most important support of the day.
- 90.90: the rising trendline on the intraday charts.
- 90.29: short-term support.
- 89.68/78: important support area containing the lows of Feb 11th, 12th & Dec 29th 08.
- 91.22: intraday top.
- 91.74: Fibonacci 50% for the last move falling from 93.28.
- 92.10: Fibonacci 61.8% for the same move.
Forex trading analysis by Forexpros - Written by Munther T. Marji
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