Forexpros.com Daily Analysis - 11/01/2010

Free webinar from Forexpros - Identifying Low Risk, High Reward, and High Probability Trading Opportunities For Short Term Forex Traders

Expert: Sam SeidenWhen: Thu, Jan 21, 2010, 11:00 EST

During this session, we will apply what we learned during session one to the world of active short term trading in the Forex markets. We will walk through the trade selction 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.This webinar is the second of a three part series brought to you by Online Trading Academy and ForexPros.

Click here to join free.

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Fundamental Analysis: Trade Balance

The Trade Balance index will be published tomorrow (Jan 12) in the US, Britain and Canada.The Trade Balance index measures the difference in worth between exported and imported goods (exports minus imports). This is the largest component of a country's balance of payments.Export data can give reflection on the country's growth. Imports provide an indication of domestic demand.Because foreigners must buy the domestic currency to pay for the nation's exports, it may have sizable affect on the domestic currency.A higher than expected reading should be taken as positive/bullish for the currency, while a lower than expected reading should be taken as negative/bearish for the currency.Analysts predict a reading of -32.90B for the USD, -7.10B for the GBP and 0.40B for the CAD.

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Euro Dollar

The Euro broke the resistance specified in Friday’s report 1.4332, and successfully reached both suggested targets 1.4407 & 1.4485. But this rising move have bumped into (And slightly surpassed) the trend line which was the center of our attention all last week, and caused a notable reversal close to 1.4485. Thus, the Asian session top 1.4531 will be an important resistance to determine if this line is able to create another reversal, or if it will be broken this time, letting the price fly. The support is at 1.4485. We will be waiting for a break of either of them to determine short term trend. IF the resistance 1.4531 is broken, the Euro will gain a lot of strength, targeting 1.4625, and the important Fibonacci level 1.4678. If the support at 1.4485 is broken, it would indicate that this line has probably created another reversal similar to the one we saw last week, ideally targeting 1.4428 & 1.4365.

Support:• 1.4485: important previous resistance close to last week’s high.• 1.4428: Fibonacci 38.2% for the short term.• 1.4365: Fibonacci 61.8% for the short term.

Resistance:• 1.4531: Asian session high.• 1.4625: Nov 3rd low.• 1.4678: Fibonacci 50% for the medium term.

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USD/JPY

Although it has reached 93.75, the Dollar-Yen has closed obviously on the negative side, below the important trend line on the daily charts. The price broke the support specified in Friday’s report, and successfully reached the first suggested target 92.20. We have explained the importance of Friday’s closing in the last report, and said that closing above or below 93.35 leads to completely different readings: a negative one and a positive one. The closing price came clearly below 93.35 (Fridays close 92.62), which can be read without hesitation as a negative closing. Today, we will be on the watch for this line which is currently at 93.11, and we will take a negative bias towards this pair as long as we are below this most important resistance for the time being. Support is at 92.20 (and as this report is being prepared we are trading only pips above it). Breaking the resistance 93.11 will be surprising to us, and will give the needed strength to reach areas beyond 94, most important of which are 94.05 & 94.62. While a break of the support 92.20 would open the way to a drop towards 91.51 & 90.76.

Support:• 92.20: Fibonacci 61.8% for the short term.• 91.51: obvious resistance area on the hourly chart.• 93.12: Fibonacci 61.8% for the whole rise from 88.91 to 93.75.

Resistance:• 93.11: the falling trend line from 101.43 on the daily charts.• 94.05: Aug 28th high.• 94.62: Jan 6th 2008 high.

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Forex trading by Munther Marji for Forexpros. See Forexpros for technical and fundamental analysis.

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DisclaimerTrading 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.