Forexpros Daily Analysis Dec 28, 2009

Free webinar on Forexpros tomorrow - Mapping Out the Banking System & Foreign Exchange Dealing Process, Part II

Expert: Dan Cook

When: Tue, Dec 29, 2009, 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.

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Fundamental Analysis: CB Consumer Confidence

The CB Consumer Confidence report will be published tomorrow (Dec 29).

The Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict the consumer spending, which is a major part in the total economic activity. Higher readings point to higher consumer optimism.

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 49.50, down from the previous 53.00.

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Euro Dollar

The Euro broke the resistance specified in Thursday’s report 1.4371, but settled for a test of the resistance 1.4410 (Thursday’s high was 1.4416). The technical outlook is still gaining positivity after breaking the falling channel that we talked about all last week, but failure at 1.4410 might be the first signal indicating a new wave of weakness. And since it is an important resistance, we will consider as resistance of the day, and breaking it would confirm the upward direction that started by breaking the descending channel. Short-term support is Thursday’s resistance 1.4371, and if this important level is broken, this pair would target the important 1.4292 (important for short term and may be medium term as well), and then 1.4233. A break of today’s most important resistance 1.4410 would cause a jump to 1.4502, and later to Fibonacci 38.2% for the medium-term 1.4596.

Support:

• 1.4371: Thursday’s resistance that became today’s short term support.

• 1.4292: Fibonacci 61.8% short term and it is close to the rising trend line from last week’s low on intraday charts.

• 1.4233: important intraday support from last week.

Resistance:

• 1.4410: previous well known resistance, price stopped near it on Thursday.

• 1.4502: Dec 15th low.

• 1.4596: Fibonacci 38.2% for the medium term (for the whole move from 1.5139 to 1.4260).

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USD/JPY

Though it tried more than once, the Dollar-Yen could not break 91.78, and that is why there is almost no change to the technical outlook we spoke about yesterday. The price is invited to show strength against the resistance 91.78 (currently trading pips below it), and if broken, a test of the area that caught our attention 92.31-92.52 will be only a matter of time. And if this area is broken, the Dollar will take off, towards March 19th low 93.53. On the other hand, if the price fails to create a sustained break of 91.78, a drop towards 90.90 where the retest level for the broken channel is waiting, will follow. And if this level is broken, the price will drop towards the important 90.03, and if broken we are to see 89.55.

Support:

• 90.90: the retest level for the broken channel.

• 90.03: Fibonacci 61.8% for the whole move from 88.91 to 91.85.

• 89.55: previous important intraday low.

Resistance:

• 91.78: Jul 8th low.

• 92.31-92.52: resistance area created between Oct 27th & Sep 21st tops.

• 93.53: Mar 19h low.

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Forex trading by Munther Marji for Forexpros. See Forexpros for information on Central Banks and trading tools.

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Disclaimer

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.