Forexpros Daily Analysis Jan 12, 2010
Fundamental Analysis: Core Retail Sales
Traders of USD await the publication of the Core Retail Sales report.
The Core Retail Sales is a monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes in the US, excluding auto. It is an important indicator of consumer spending and also correlated to consumer confidence and considered as a pace indicator of the US economy .
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 0.30%, down from the previous 1.20%.
The Euro did not succeed in its first attempt to break the trend line we talked about yesterday. And also, the price did not move all too much, leaving yesterday’s Asian session top 1.4531 as the important resistance to determine if this line is able to create another reversal, or if it will be broken this time, letting the price fly. The support is at 1.4485. We will be waiting for a break of either of them to determine short term trend. IF the resistance 1.4531 is broken, the Euro will gain a lot of strength, targeting 1.4625, and the important Fibonacci level 1.4678. If the support at 1.4485 is broken, it would indicate that this line has probably created another reversal similar to the one we saw last week, ideally targeting 1.4428 & 1.4365.
• 1.4485: important previous resistance close to last week’s high.
• 1.4428: Fibonacci 38.2% for the short term.
• 1.4365: Fibonacci 61.8% for the short term.
• 1.4531: Asian session high.
• 1.4625: Nov 3rd low.
• 1.4678: Fibonacci 50% for the medium term.
We will maintain a negative bias towards this pair, and it is enough to take a look at the attached chart to know the reason why. Dollar-Yen is currently trading below the rising trend line on the hourly chart, and it is vulnerable to a big drop. We explained in the last two reports the importance of Friday’s closing, and said that closing above or below 93.35 leads to completely different readings: a negative one and a positive one. The closing price came clearly below 93.35 (Fridays close 92.62), which can be read without hesitation as a negative closing. Today, we will place our focus on the broken trend line which is currently at 92.40, and we will take a negative bias towards this pair as long as we are below this most important resistance for the time being. Support is at 91.70. Breaking the resistance 92.40 will be surprising to us, and will give the needed strength to reach areas beyond 94, most important of which are 94.05 & 94.62. While a break of the support 91.70 would open the way to a drop towards 90.76 & 89.79.
• 91.70: the moving average SMA100 on the hourly chart.
• 90.76: Fibonacci 61.8% for the whole rise from 88.91 to 93.75.
• 89.79: Fibonacci 61.8% for the whole rise from 87.35 to 93.75.
• 92.40: the retest level for the broken trend line on the hourly chart.
• 94.05: Aug 28th high.
• 94.62: Jan 6th 2008 high.
Forex trading analysis by Munther Marji for Forexpros. See Forexpros for World Indices charts and other trading tools.
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