Forexpros.com Daily Analysis - 04/02/2010

Free webinar on ForexPros - Identifying Low Risk, High Reward, and High Probability Trading Opportunities for Swing and Longer Term Forex Traders.

Expert: Sam SeidenWhen: Today, Feb 4, 2010, 11:00 EST

During this session, we will apply what we learned during session one to the world of swing and longer term trading in the Forex markets. We will walk through the trade selection process, applying our rule based strategy to identify price levels where demand and supply are out of balance and where profit margins are large offering us significant risk/reward opportunities for Forex swing and position trading.

This webinar is the last of a three part series brought to you by Online Trading Academy and Forexpros.

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Fundamental Analysis: Unemployment Rate

Traders of the US anticipate the publication of the unemployment rate tomorrow, February 5. It measures the percentage of the total labor force that is unemployed but actively seeking employment and willing to work in the US. A high percentage indicates weakness in the labor market. A low percentage is a positive indicator for the labor market in the US and should be taken as positive for the USD. Analysts predict no change in the future reading, a rate of 10.00%.

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Euro Dollar

The Euro stopped accurately at Fibonacci 50% retracement level for the drop from 1.4192, which is at 1.4022 (yesterday’s high was 1.4025), before a downfall toppled it more than 150 pips in 16 hours. As we always say, an accurate stop at an important Fibonacci level (i.e. the 50% or the 61.8%) is an indication of reversal. And in this case it indicates a reversal in short term trend from an uptrend to a downtrend. Thus, we find that analysis supporting more drop and drifting away from yesterday’s top, and looking for new targets below this week’s low 1.3851. Short term support is at 1.3865, and breaking it would mean we are heading to test the important 1.3824, and in case it is broken 1.3747 will be an immediate first modest target, and we expect bigger targets on the short term. While the resistance is at 1.3963, and only breaking this important level would let us dump our negative outlook for the short term. In case this break actually happens, the targets will be the same as they were yesterday 1.4062 & 1.4128.

Support:• 1.3865: Asian session low.• 1.3824: Dec 19th 2008 low.• 1.3747: Jun 16th low.

Resistance:• 1.3963: Fibonacci 61.8% for the last drop from 1.4025.• 1.4062: Fibonacci 61.8% for the last drop from 1.4192.• 1.4128: Fibonacci 38.2% for the whole drop from 1.4577.

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USD/JPY

Before reaching 90, the Dollar-Yen found support at 90.06, and created an uprising that took it to 91 for the first time in two weeks. This move is still inside the “adjusted” rising channel on the hourly chart. It is a slowly rising channel, with its top close to the resistance 91.63, and its bottom is close to the support 90.30. If the price holds inside this channel, we expect the slow rise to continue towards the important short term Fibonacci resistance levels. Today’s support is at 90.52, and breaking it means that the odds of breaking the bottom of the channel are huge. Such a break would target the important 89.79, and then 88.91. In case trading inside this channel continues, this gradual rising will target a test of the nearby resistance 91.03 once again, and if broken the targets would be short term Fibonacci levels, where the 50% retracement is at 91.44 & the 61.8% is at 91.98, and would play as first and second targets for this break, in case it happens.

Support:• 90.52: Fibonacci 61.8% for the short term.• 89.79: Jan 21st low.• 88.91: Dec 17th low.

Resistance:• 91.03: important intraday top.• 91.44: Fibonacci 50% for the whole drop from 93.75.• 91.98: Fibonacci 61.8% for the whole drop from 93.75.

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Forex Trading Analysis written by Munther Marji for ForexPros.

For information on currency trading see ForexPros.

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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.