ForexPros Daily Analysis July 27, 2010

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Fundamental Analysis: Core Durable Goods Orders

The Core Durable Goods Orders measures the change in the total value of neworders for durable goods, excluding transportation. Because aircraft ordersare very volatile, the core number gives a better gauge of orders trends.Higher reading indicates activity increase by manufacturers. A higher thanexpected reading should be taken as positive/bullish for the USD, while alower than expected reading should be taken as negative/bearish for the USD.The analysts predict a future reading of 0.60%.

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Euro Dollar

The Euro survived just above the support we presented in yesterday's report1.2883 with amazing accuracy (yesterday's low was 1.2886). Then it went allthe way up to break yesterday's resistance 1.2942, and it is stillapproaching the suggested target 1.3026 as we speak (the high until themoment of preparing this report is 1.3016). Therefore, we await a test ofthe important resistance 1.3026, where there is the 2-month high. But, wewill not lose interest in our newly found rising channel we talked aboutyesterday, and when we look at the hourly chart, we find that Friday's divehas stopped at the bottom of a new rising channel which will be placed underour focus for today, knowing that the bottom of the channel is at 1.2872.Moreover, we find the area between Fibonacci 61.8% at 1.3075 and May 10thtop 1.3092 to be very interesting. Thus, we recommend giving attention toall these areas, and we believe that each of them will play a role indictating today's direction! In case we break the support at 1.2872, we willdrop with the Euro for today and probably the next few days, targeting1.2792, and 1.2691. On the other side, the resistance is at the important1.3026. If broken, the Euro will continue its bounce from the channelbottom, targeting 1.3092 & 1.3200.

Support:* 1.2872: the bottom of the rising trend channel on the hourly chart.* 1.2792: Friday's low.* 1.2691: Fibonacci 38.2% for the whole rise from 1.2150.

Resistance:* 1.3026: last Tuesday's & 2-month high.* 1.3092: May 10th high.* 1.3200: Apr 23rd low.

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USD/JPY

As we have said several times in last week's reports, signs show that thepossibility of a rising correction to correct the fall from June 3rd top89.09 to July 16th low 86.25 is growing. On the top of these signs: theinverted hammer formation, which appeared on the daily chart, and thecompleted 5-wave move, and further more what looks to be the correctivewaves (a) & (b) forming in an ideal manner (please refer to the attachedchart), and wave (c) developing in an ideal fashion. Therefore, and eventhough we are negative about this pair on the medium term, we should notneglect these signs which force themselves upon us for today! Short termsupport is at 86.81, and if broken, the price will resume its drop after a3-wave correction, targeting 85.84 & 84.81. Resistance is at 87.37. A breakhere indicates that the odds of c continuation of the correction of the 5waves down from 92.87 are still massive. This will target 88.01, then 88.78.It is worth mentioning that breaking wave 5 bottom 86.25 even with a fewpips would strongly indicate the termination of the correction we arecurrently living, and will officially announce a new wave down!

Support:* 86.81: obvious hourly support, which has been tested several times duringthe Asian session.* 85.84: Nov 30th 2009 low.* 84.81: Nov 27th 2009 low, and the low of the last 15 years!

Resistance:* 87.37: short term 61.8% Fibonacci level.* 88.01: Fibonacci 61.8% for the drop from 89.09.* 88.78: Fibonacci 38.2% level for the whole drop from 92.87 (the 5 wavesdown).

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Forex Trading Analysis written by Munther Marji for ForexPros. For more information about technical analysis visit ForexPros.

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