ForexPros Daily Analysis March 9, 2010

Fundamental Analysis: JPY - GDP (QoQ)

Traders anticipate the publication of the Gross Domestic Product (GDP). It is the broadest measure of economic activity and is a key indicator for the economy's health. The quarterly percent changes in GDP shows the growth rate of the economy as a whole.
A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY. Analysts predict a reading of 1.00%.

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Euro Dollar

The slightly surpassed 1.37, but only to retreat right after. We believe that the most important thing that happened in the past 24 hours is the Euro’s inability to overcome 1.3734, the point from which the 5 waves down started (please refer to the chart). And as we said yesterday, as long as the price is below this level, we are closer to a downtrend, and also, this wave count will be valid. Short term support is provided by Fibonacci 61.8% at 1.3595, and it was touched down to the point while writing this report. If the price holds above it we can hope for a bounce, especially if the price breaks short term resistance 1.3648. If this level is broken, the price will start to rise strongly, and this strong rise will be able to break 1.37, targeting 1.3755 and may be 1.3838. But as we said, we should pay attention to the Euro’s ability to break 1.3734 or not, since this hold a special importance. If the price goes back down, and breaks 1.3595, we expect the pair to fall to 1.3529, and at a later time to continue towards the 1.34 areas where there is 1.3459.

Support:
• 1.3595: Fibonacci 38.2% for the short term.
• 1.3529: Friday’s low.
• 1.3459: Mar 1st low.

Resistance:
• 1.3648: the falling trend line from yesterday’s high on intraday charts.
• 1.3755: the top of the falling channel on the hourly charts, and a very important resistance for the short term & the medium term.
• 1.3838: Feb 9th high.

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USD/JPY

Fibonacci resistance 90.66 has succeeded in reversing the short term direction, the price fell to 89.86 this morning, before barely going above 90 again. This rebound from Fibonacci retracement level with very good accuracy is evidence that the general direction of the short-term is down. If this turns out to be true, we will see the Dollar-Yen breaking the nearby support 89.90, and trying to attack the Fibonacci support 89.09 which will act as a first target for this break, and the level that if broken, we can say that the drop from 90.66 is more than a correction. If this level is also broken, the target would be 88.46, on the way to lower targets. As for the resistance it is provided by the falling trend line from this week’s high so far 90.66, which is at 90.21. If this line is broken, we will be on the way to another weekly high, since the targets for such a break would be 90.84 & the well known important resistance 91.67.

Support:
• 89.90: intraday support.
• 89.09: Fibonacci 61.8% for the short term.
• 88.46: previous hourly support.

Resistance:
• 90.21: the falling trend line from 90.66
• 90.84: Nov 5th & 6th high.
• 91.67: previous hourly support.

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Forex Trading Analysis written by Munther Marji for ForexPros.

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