Forexpros Daily Analysis Oct 28, 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.
The U.S. Department of Labor will publish the weekly Initial Jobless Claims report tomorrow (Oct 29).
The report is a measure of the number of people who file for unemployment benefits for the first time during the given week. This data is collected by the Department of Labor, and published as a weekly report.
The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.
Usually, a move of at least 35K in claims, is required to signal a meaningful change in job growth.
A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.
Analysts predict last week’s measure of 531.00k to drop to 520.00k
In agreement with the negative technical outlook we talked about in yesterday's report, the Euro stopped at the first resistance in the report 1.4927 with great accuracy (yesterday's high 1.4926), then dropped breaking the support 1.4861, and reached the first target of that break 1.4771 with great accuracy as well (yesterday's low 1.4769). We still favor more downside movement, which is an expectation built on the negative technical outlook after breaking 1.4992, but we should not neglect the rising probability of an upward correction for the drop from 1.5061, which reached almost 300 pips so far. Short-term support is provided by the rising trendline from yesterday's low, currently at 1.4801, and breaking it would mean a continuation of the sharp drop, in order to break 1.4771, and target Fibonacci 61.8% for the whole up move from 1.4480, at 1.4702. Short-term resistance is 1.4844, and breaking it would target the area between 1.4881 & 1.4949. If the negative outlook is to persist, the later (1.4949) should hold.
• 1.4801: the rising trendline from yesterday's low on the intraday charts.
• 1.4760: Oct 13th low.
• 1.4702: Fibonacci 61.8% for the whole move from 1.4480.
• 1.4844: Monday's low.
• 1.4927: Fibonacci 38.2% for yesterday's drop.
• 1.4978: Fibonacci 61.8% for yesterday's drop, and the most important resistance for the time being.
The Dollar-Yen stayed below the resistance 92.27, broke the support 91.98, and reached the first target for this break 91.26 successfully. With this down move, we are getting closer to the bottom of the rising trend channel on the hourly chart, currently at 90.76, making it support of the day. Staying above it, would give this pair a chance to correct the drop from Monday's high 92.31, creating a correction that could reach 91.84, the most important resistance for the short-term. We believe that the borders of the current area are support 90.76 and resistance 97.84, and before breaking any of them, it would be difficult to predict the next move's direction. And we believe that the direction of that move will be the direction of the break. If we break support 90.76, that would mean we broke the rising trend channel, and the trend for the short and medium terms, and that would take the price close to 90 again. On the other hand, breaking resistance 91.84 would mean that the drop from Monday's high is over, and that we are on the way to 92.52-58.
• 90.76: the bottom of the rising trend channel on the hourly.
• 90.06: Oct 20th low.
• 89.61: Oct 12th low.
• 91.54: Fibonacci 38.2% for the short-term.
• 91.84: Fibonacci 61.8% for the short-term, the most important resistance for now.
• 92.52-92.58: previous well known resistance area.
Forex trading analysis by Forexpros - Written by Munther T. Marji
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