ForexPros Daily Analysis February 10, 2010

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.

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Fundamental Analysis: Initial Jobless Claims

The traders of the US look forward to the publication of the Initial Jobless Claims tomorrow, January 11. The claims are a seasonally adjusted measure of the number of people who file for unemployment benefits for the first time during the given week. This data is collected by the Department of Labor, and published as a weekly report.
The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.
On a week-to-week basis, claims are quite volatile.
Usually, a move of at least 35K in claims is required to signal a meaningful change in job growth.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD. Analysts predict a slight decline from the past reading to a reading of 460.00k.

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Euro Dollar

The Euro broke yesterday’s resistance 1.3745, and successfully reached the first target 1.3805, which enhances our assumption of having a corrective rebound. As we said yesterday, with Friday’s 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 today’s resistance 1.3805 before we can say the odds favor a continuation of this rebound. Short-term resistance is at 1.3805, 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 the important 1.3857 & 1.3936. While the support is at 1.3743, and breaking it would bring back the drop, targeting 1.3665 & 1.3582.

Support:
• 1.3743: the rising trend line from 1.3584 on intraday charts.
• 1.3666: a well known previous support/resistance area.
• 1.3582: Apr 6th high.

Resistance:
• 1.3805: Fibonacci 50% for the last drop from 1.4025.
• 1.3857: Fibonacci 61.8% for the last drop from 1.4025.
• 1.3936: Feb 1st high.

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USD/JPY

Dollar-yen did not break any of the important levels specified in yesterday’s report, although it tried to break 89.87 more than once, and kept trading in a relatively tight range without any major moves that have any influence on the technical outlook, leaving the technical outlook hardly changed. What is worth mentioning is that we are getting closer to long term Fibonacci 61.8% support at 88.23 (Thursday’s low 88.53), and there is no doubt that this level is the most important support in these areas. As for the short term, the support is at 89.51, and breaking it would indicate a movement to test the most important support 88.23, with a possibility to stop around 88.81 even if temporary. Short term resistance is still at 89.87, and breaking it would indicate that the Yen has settled for closing on 88.23 without reaching it, and that we are correcting yesterday’s drop, or may be the whole drop from 93.75, which might be over close to the Fibonacci support. Such a correction would have ideal targets at 91.14 & 91.76.

Support:
• 89.51: the rising trend line from Thursday’s low on intraday charts.
• 88.81: Friday’s low.
• 88.23: Fibonacci 61.8% for the whole move from 84.81 to 93.75.

Resistance:
• 89.87: Fibonacci 50% for the short term.
• 91.14: Fibonacci 50% for the whole drop from 93.75.
• 91.76: 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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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.