ForexPros Daily Analysis April 22, 2010
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Fundamental Analysis: Core Durable Goods Orders
Traders of the US anticipate the publication of the Core Durable Goods Orders. It measures the change in the total value of new orders for durable goods, excluding transportation.Because aircraft orders are very volatile, the core number gives a better gauge of orders trends.Higher reading indicates activity increase by manufacturers.A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD. Analysts predict a reading of 0.70%.
The Euro broke yesterday’s support 1.3437, and dropped approaching the suggested target 1.3340 and reaching a new bottom at 1.3357. What happened did not move our focus away from the descending channel we presented yesterday. And although there are a few pips outside the channel on both sides, this channel looks solid, and it deserves our attention. As we can see on the attached chart (the hourly chart), there is a descending channel with two bottoms on its lower trend line. This channel is the guardian of the falling trend, and its top at 1.3427 provides the most important resistance. If the price stays under this level, and continued to trade within the channel, more downside activity is to be expected. But, if we break this resistance, the price will contradict our hypothesis of a downtrend, and will start to rise and target 1.3546 & the important 1.3675. As for the support it is just above yesterday’s low, at 1.3369 to be specific, and if broken we see 1.3113 as a first and modest target for such a break, on the way lower.
Support:• 1.3369: important intraday support.• 1.3266: Mar 25th & 25th low, and the last 9 months low as well.• 1.3113: Mar 30th 2009 low.
Resistance:• 1.3427: the top of the falling channel on the hourly chart.• 1.3546: short term 50% Fibonacci.• 1.3675: the horizontal resistance which stopped the price twice and caused the current drop.
After holding close to 91.66 on Monday, the price started to rise from this Fibonacci support, and continued all the way until it achieved the “surprise” and started trading above the previously broken trend line. This very strong rise from the bottom which came only 8 pips below Fibonacci at 91.66, indicates that the trend is up. But, the return of the price to trade below this line once again today, is really puzzling. Thus we have no choice but to focus on short term levels without any prior bias. Short term support is at 92.72, and if broken we will test last Friday’s low 91.89, and then the previous important resistance 90.78. While the resistance is still where it was in the past few days at 93.61, and we do not recommend cheering for the Dollar before breaking it. If we do, we will target 94.24 first & then 95.05
Support:• 92.72: Asian session low.• 91.89: Friday’s low.• 90.78: previous resistance on hourly chart.
Resistance:• 93.61: an intraday resistance which stopped the price several times.• 94.24: Apr 7th high.• 95.05: Aug 24th high.
Forex Trading Analysis written by Munther Marji for ForexPros.
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