Forexpros Daily Analysis Oct 26, 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.


The National Australia Bank (NAB) will publish its Quarterly Business Confidence report tomorrow (OCT 27).

The report measures the current business conditions in Australia by analyzing the economic situation in the short term.

The indicator is concluded from a survey of around 1000 companies.

A rising trend indicates an increase in business investment which may lead to higher levels of output.

Above 0 indicates improving conditions, below indicates worsening conditions.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

The Australian Market has seen an improving trend ever since the low reading of Business Confidence this February which stood at -42.

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Euro Dollar

We can say that the Euro is still facing trouble in the 1.5045-1.5062 area, and with closing on towards 1.5082 very slowly, we should be on the watch for a top near this level, where a relatively sizable correction is expected to begin. The most important resistance for now is 1.5082, and only breaking it would weaken the probability of a top formation in this area. The most important support is the bottom of the rising channel on the hourly charts, which meets the moving average SMA100 at 1.4992. If broken, we expect a correction to match the rise from 1.4480, which would take the price in the next few days to 1.4840 at the very least. But, if things go against our expectations, and the price rise and breaks 1.5082, that would open the way towards 1.5144 & 1.5200.

Support:
• 1.4992: the bottom of the rising channel on the hourly chart, and the moving average SMA100.
• 1.4896: clear support area on the hourly chart.
• 1.4840: Fibonacci 38.2% for the whole move from 1.4480.

Resistance:
• 1.5082: previous daily high from 2008.
• 1.5144: previous support area that contained more than one daily low during last year.
• 1.5200: previous resistance area from 2008.

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USD/JPY

Dollar-Yen reached 92 for the first time in more than a month. And after breaking 91.63, its is only logical to say that the odds favor a continuation of this slow rise, probably to our previously suggested target area 92.52-58, which could be an area for the price to reverse from, and start correcting the whole rise from 87.98. Short-term resistance is 91.94, and breaking it would mean we are heading towards the target area 92.52-58, or may be to a more exciting and attractive target, which is 92.88: Fibonacci 50% resistance for the whole down move from 97.77 to 87.98. And since the 2 targets are not far from each other, the whole area combining them (92.52-92.88) is considered one wide resistance area that we expect is able to reverse the direction on the short-term, and initiate a correction that we can not talk about its size now. The most important support is 91.47, provided by the rising trendline on the 15 minute chart. If broken, we will target 90.90 where the known previous resistance meets the SMA100. And Since the RSI is standing in the middle of the way, the odds of going in either direction look close.

Support:
• 91.47: the rising trendline on the intraday charts.
• 90.90: the previous known resistance, and the moving average SMA100.
• 89.38: Oct 19th low.

Resistance:
• 91.94: intraday resistance.
• 92.52-92.58: previous well known resistance area.
• 92.88: Fibonacci 50% for the whole drop from 97.77 to 87.98.
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Forex trading analysis by Forexpros - Written by Munther T. Marji

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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.