Forexpros Daily Analysis Oct 20, 2009

Free webinar - Spotting behavioral and fundamental clues in the market to catch giant price moves

Expert: Kris Matthews
When: Sun, Nov 1, 2009, 10:00 EST

Traders often forget that the market is made up of human beings, rather than price patterns and news events. Your edge in the market (and in any zero-sum-game) is knowing something about the other players' positions.

To profit from the currency market you must understand that there are three groups of players in the currency market and each has particular motives, limitations, and behaviors. Identifying the clues that each of these groups leave behind in a systematic manner will position you to capture the large macro moves in the forex market.

Click here to join the webinar.

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Tomorrow (Oct 21) The Bank of England's (BOE) Monetary Policy Committee (MPC) will publish its record of the committee's interest rate meeting held two weeks ago.

The meeting gives a picture of economic conditions in the UK, and records the votes of the individual members of the Committee.

If the BOE is hawkish about the inflationary outlook, it should be taken as positive/bullish for the GBP.

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Euro Dollar

The Euro broke the yesterday's resistance 1.4899, and reached the first target of this break 1.4966, and came close to 1.50 (the high until the moment of preparing this report is 1.4993). We will adopt this top as resistance of the day, if broken we will head with the Euro to the top of the rising channel on the hourly chart, which is currently at 1.5040, and may be we will reach the highest level since Aug 2008, at the resistance 1.5082. on the other hand, the support 1.4964 obviously held during the last few hours, that is why we will consider it the short-term most important support. And if broken, what will be expected is a correction for the move up from 1.4828 (at least), which is expected to drop the price back to the important 1.4891 first (Fibonacci 61.8% for the short-term), and if broken, we can expect more drop.

Support:
• 1.4964: lowest price on intraday charts during the last few hours.
• 1.4891: Fibonacci 61.8% for the short-term.
• 1.4842-1.4849: The support area which contains the lows of Thursday & Friday.

Resistance:
• 1.4993: short-term resistance.
• 1.5040: the top of the rising channel on the hourly chart.
• 1.5082: previous daily high.

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USD/JPY

The Dollar-Yen stopped exactly at the first resistance in yesterday's report (highest price after the issuance of yesterday's report is 90.97), and it did not break the support at 90.07, which means that yesterday's movement did not have any technical impact, and did not break the important support nor the important resistance. The most important support is the retest level of the broken trendline, and Fibonacci 50% for the short-term at 90.07, 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 2 weeks ago an attempt for a break. As for the resistance, the most important one is 90.73, the top of the falling channel on the intraday charts, and the key to the most important stop in these areas is 91.63, which is expected to be an important test. Breaking it means that this rise will continue in the next few days, to areas above 92, where 92.52-92.58 is the first target for this break. While failure here would indicate that this is but a short-term rise.

Support:
• 90.07: Fibonacci 50% short-term and the retest level for the broken trendline.
• 89.64: the bottom of the rising channel on the intraday charts.
• 88.68: support area that supported the price twice this month.

Resistance:
• 90.73: the falling trendline from Friday's top on intraday charts.
• 91.63: previous support & resistance area, the most important resistance for the short-term.
• 91.93: Sep 2nd low.

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Forex trading analysis by Forexpros - Written by Munther T. Marji

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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.