Forexpros Daily Analysis Oct. 14, 2009
Free webinar - Get to grips with Position Sizing
Expert: Tony Beckwith
When: Thu, Oct 29, 2009, 12:00 EST
Tony Beckwith of specialist risk control software firm MTPredictor returns to explain how to get your forex trade size right to cope with winners - and why it is imperative to do so!
Traders in the U.S await tomorrow's publication of the Department of Labor's monthly CPI measurement (Oct 15).
The Core Consumer Price Index (CPI) measures the changes in the price of goods and services excluding food and energy.
The CPI measures price change from the perspective of the consumer.
It is a key way to measure changes in purchasing trends and inflation in the US.
A higher than expected reading should be taken as positive/bullish for the USD (as the common way to fight inflation is raising rates, which may attract foreign investment), while a lower than expected reading should be taken as negative/bearish for the USD.
Analysts forecast no change in the current rate, standing at 0.10%
Finally, the Euro reached new tops for this year, and came very close to our favorite target 1.4901 (the high until this very moment is 1.4898). By taking a look at the drawn channel we find that the important question now is will 1.50 be the next stop? To answer this question, we must estimate the strength of the resistance levels in this area, especially 1.4901 & 1.4953. We expect that in case of a break 1.4901, the Euro will be able to reach 1.50. But, if 1.4901 succeeds in capping the price, what will be expected is a correction for the move up from 1.4672 (at least), which is expected to drop the price back to 1.4793 first, and if broken, we can expect more drop. The important support now is the nearby 1.4872, a break would signal that a correction of some kind has started. To summarize: 1.4901 is resistance of the day, a break would lead to 1.50, while the support of the day is 1.4872, and a break here would lead to 1.4793 as the first important stop, and if broken we will head to the important support on the intraday charts 1.4755.
• 1.4874: short-term support.
• 1.4793: Fibonacci 61.8% for the short-term.
• 1.4755: the rising trendline from 1.4480 on the intraday charts.
• 1.4901: previous daily high.
• 1.4953: previous daily high.
• 1.5000: the top of the rising channel on the hourly chart.
The Dollar-Yen dropped to 89 again, and we might see it test 88.68 today. But before that, we need to see a break of 88.96, which is the most important support for the short-term, and if broken the direction would be down to test the important support 88.68, which must hold to prevent another attempt to test 87.97 which survived last week's attempt for a break. We will still pay attention towards the trendline on the hourly chart, which is currently at 90.27, and if it is broken, then the Dollar would be invited to show how deep its real strength is over a series of resistance areas starting at 90.67 and reaches 91.63. The resistance that is attached to this line is 90.27, and if broken, then the line is broken, and the next stop would be 90.67 which is an important stop on the way to the most important stop in these areas 91.63.
• 88.96: short-term support.
• 88.68: support area that supported the price twice this month.
• 87.97: Jan 23rd low.
• 90.27: the falling trendline on the hourly chart.
• 90.67: previous support.
• 91.12: previous support & resistance area.
Forex trading analysis by Forexpros - Written by Munther T. Marji
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.