ForexPros Daily Analysis February 22, 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.
Fundamental Analysis: German Ifo Business Climate Index
European traders look forward to the publication of the German Ifo Business Climate Index. The German Information and Foschung (Ifo) Business Climate Index determines the business sentiment and conditions in the Euro-zone. The reading is concluded from survey of about 7,000 businesses. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR. Analysts predict a rise from the past reading to a reading of 96.3.
The Euro broke Friday’s resistance 1.3507 and successfully reached the first suggested target 1.3572, before hitting the second target 1.3653 after the open with astonishing accuracy (the high until the moment of preparing this report is 1.3652). That is why we will consider this top to be resistance of the day. If the price continue to show strength, and broke this resistance, the current rise will go on for the short term at least. We see today’s most important target for such a break will be the test of the falling trend line from 1.3838, which is currently at 1.3737. And if broken the next target will be 1.3810. But if 1.3653 holds, and succeeds in reversing short term correction, then the price will fall to support 1.3618, and if broken the targets will be 1.3544 (which may be an ideal target for such a drop, and then 1.3491.
• 1.3618: the confirmation level for the “Engulfing pattern” on the hourly chart.
• 1.3544: short term 50% Fibonacci level.
• 1.3284: the rising trend line from Feb 19th low on intraday charts.
• 1.3653: Important intraday top.
• 1.3737: the falling trend line from 1.3838 on the hourly chart.
• 1.3810: important intraday top.
Dollar-Yen was not able to break the support 91.51 or the resistance 92.31 on Friday. But in spite of a relatively limited trading range, it has left us a very important signal on the charts, which is a clear “Reversal Day” pattern. This pattern is one of the strongest reversal formations, and most successful ones. Thus, we will immediately take the Yen side. We expect this pair to start falling once we break the short term support 91.55, which we trade pips above right now. IF the support at 91.55 is broken, we will witness a strong drop targeting 90.40 as a first target, and maybe we will also see 89.90. But if the price holds above this support, we could see a price behaviour negating this outlook, and we could see a test of the resistance 92.31. If this resistance is broken, the strength signs from last week will continue to achieve gains, with the next set of targets at 93.08 & the important 93.75.
• 91.55: important intraday bottom.
• 90.40: the bottom of the rising channel on the hourly chart.
• 89.90: Feb 15th low.
• 92.31: Oct 27th high.
• 93.08: Jul 22nd low.
• 93.75: Jan 8th top.
Forex Trading Analysis written by Munther Marji for ForexPros.
For information on US dollar index see ForexPros.
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