ForexPros Daily Analysis March 1, 2010
Free webinar on ForexPros - Using Chart Patterns to Recognize Trends in the Market
Expert: Anthony Cherniawski
When: Mon, Mar 15, 2010, 11:00 EST
This session will discuss the proprietary cycles studies with other patterning devices and techniques to enhance the accuracy of cycle projections and trades. This multi-disciplinary approach may help improve the outcome of trading decisions for beginning and even experienced traders. The use of chart patterns, Elliott Wave, trend lines and even Japanese Candlesticks provide a means of raising the probability of success in trading the markets.
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Fundamental Analysis: Existing Home Sales
Traders of North America anticipate the decision of the Bank of Canada (BOC) on short term interest rate. The decision on where to set interest rates depends mostly on growth outlook and inflation. The primary objective of the central bank is to achieve price stability. High interest rates attract foreigners looking for the best risk-free return on their money, which can dramatically increases demand for the nation's currency.
A higher than expected rate is positive/bullish for the CAD, while a lower than expected rate is negative/bearish for the CAD. Analysts predict the reading will stay at a rate of 0.25%.
The Euro broke the resistance specified in Friday’s report 1.3617, only to reach 1.3681. And after falling again closer to 1.36, the resistance 1.3648 came back into play, but the most important resistance in these areas is provided by the falling trend line from 1.3838 which is currently at 1.3713. We see that a break of 1.3648 means that the price will be heading to test the most important resistance (1.3713) as a first target for this break. And if this is also broken, we will head towards the second target 1.3810. The support is at 1.3589, and breaking it would leave us with no reason to wait for a test of 1.3713 in the short term. On the contrary we will be closer to a new test of the important support area between Wednesday’s low 1.3450, and Feb 18th low 1.3442. If the Euro breaks support at 1.3589, the downtrend will resume, targeting 1.3496 & 1.3442.
• 1.3589: the low since this week’s open.
• 1.3496: Feb 18th low.
• 1.3442: Feb 19th low.
• 1.3648: important intraday top.
• 1.3713: the falling trend line from 1.3838.
• 1.3810: important resistance level on hourly charts.
Dollar-Yen broke the support specified in Friday’s report 89.50, but it stopped 19 pips before the suggested target 88.53. And as we start a new week, we see the Dollar-Yen trying to break the falling trend line from 92.31 on the intraday charts. If it succeeds in doing so, we will be in front of a new trend in a new week. This trend line is very close to the resistance 89.34, and that is why this resistance will be resistance of the day. Breaking it would indicate this pair is targeting the short term Fibonacci retracement levels, and the major 3 levels are at 90.02, 90.43 & 90.83. We picked the first and last of them as targets for the 89.34 break. As for the resistance 88.81 has shown strength so far (please refer to the attached chart). We will adopt it as support of the day, and if it is broken, we ill not get out new trend today, the fall will continue, and the next set of targets will be 88.00 & 87.35, most of them are notably important support levels.
• 88.81: Oct 7th low.
• 88.00: Fibonacci 61.8% for the short term.
• 87.35: Dec 9th low.
• 89.34: Fibonacci 38.2% for the short term.
• 90.02: Fibonacci 38.2% for the drop from 92.31.
• 90.83: Fibonacci 38.2% for the drop from 92.31.
Forex Trading Analysis written by Munther Marji for ForexPros.
For information on US dollar index see ForexPros.
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