ForexPros Daily Analysis January 21, 2010
Free webinar on ForexPros - Identifying Low Risk, High Reward, and High Probability Trading Opportunities For Short Term Forex Traders
Expert: Sam Seiden
When: Thursday, 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 selection 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.
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Fundamental Analysis: Retail Sales (MoM)
Traders anticipate the publication of the UK Retail Sales on Friday (January 22). It is a monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes in the UK. It is an important indicator of consumer spending and also correlated to consumer confidence and considered as a pace indicator of the UK economy.
A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP. Analysts predict a change in the future reading to 1.30% versus a previous reading of -0.30%.
The Euro broke yesterday’s support 1.4185, and successfully reached the suggested target for this break 1.4103. With approaching 1.40, and most of the indicators going oversold on most time frames, we should ask ourselves, have we reached a bottom at yesterday’s low 1.4065? Price behavior has founded a support at 1.4079, before going back above 1.41. Keeping this support is step one in using this bottom to create a strong bounce, that serves (at least) as a correction for the whole move from 1.4577. Step two would be breaking the Asian session top 1.4135, then we can say that a correction has already started. Breaking resistance of the day 1.4135, would target the previous important bottom 1.4216, and then 1.4321. But if the unexpected happens and we break 1.4079, the strong & sharp drop from 1.4577 that has gained 500 pips until this moment will carry on, and will target the important 1.4006, and may be later 1.3928.
• 1.4079: the most important intraday support for the last few hours.
• 1.4006: the important bottom of Jul 29th.
• 1.3928: Jul 15th low.
• 1.4315: Asian session high.
• 1.4216: Dec 22nd bottom.
• 1.4321: Fibonacci 50% for the whole drop from 1.4577.
Dollar-Yen broke the resistance specified in yesterday’s report 91.30 and successfully reached the modest target for this break 91.64, but it did so with an astonishing accuracy since the Asian session high was exactly 91.64. This very accurate stopping indicates that Fibonacci 38.2% has stopped in the way of more rising, and could cause it trouble. Thus, we will consider 91.64 to be a resistance capable of reversing the short term direction and initiate a falling move from these levels. In case this resistance is broken the rise will continue, targeting the most important Fibonacci levels 92.04 & 92.44. In this case 92.44 will be a critical resistance for both short & medium term. But, in the case of holding below 91.64, the price will move down to challenge the rising trend line from 90.30, which is currently at 91.25. Breaking this line will bring back 90.76 into the spotlight, which will be a first target for this break, and then target 89.79 which is not less important at all.
• 91.25: the rising trend line from 90.30.
• 90.76: Fibonacci 61.8% for the whole rising move from 88.91 to 93.75.
• 89.79: Fibonacci 61.8% for the whole rising move from 87.35 to 93.75.
• 91.64: Fibonacci 38.2% for the whole move down from 93.75.
• 92.04: Fibonacci 50% for the whole move down from 93.75.
• 92.44: Fibonacci 61.8% for the whole move down from 93.75.
Forex Trading Analysis written by Munther Marji for ForexPros.
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