ForexPros Daily Analysis March 22, 2010
Fundamental Analysis: Existing Home Sales
Traders of the US anticipate the publication of the existing home sales
report. It measures the annualized number of existing residential buildings
that were sold during the previous month.
This report helps to analyze the strength of the US housing market, which
helps to analysis the economy as a whole.
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 future reading of 5.00M.
The Euro retreated, breaking the support specified in Friday’s report
1.3597, dropped as expected but settled for 1.3501, a whole 21 pips above
the suggested target 1.3480. But what took place was a confirmation that
reaching 1.38 has caused the Euro a lot of exhaustion. In addition to the
fact that the “Reversal Day” pattern which took place on Wednesday was heavy
on the pair. We can see on the attached daily chart that we are trading
within a pretty harmonized channel, and it is exciting to see that the
bottom of this channel is at 1.30, so are we heading there? The continuous
shine of the Dollar, and the extreme strength it showed on Friday against
the Pound in specific, and also against the Euro indicate that we are
probably getting there> As for the short term, the support is at Friday’s
low 1.3501, and if broken, the drop will resume, targeting the important
support, which has a few bottoms just above it: 1.3422, and then 1.3341. As
for the resistance it is at 1.3542, and breaking it would indicate that the
price will correct the big drop, with the ideal targets for this correction
are 1.3621 & 1.3696.
* 1.3501: Friday’s low.
* 1.3422: May 18th low.
* 1.3341: May 8th low.
* 1.3542: Asian session top.
* 1.3621: Fibonacci 38.2% for the short term.
* 1.3696: Fibonacci 61.8% for the short term.
The Dollar-Yen approached the magnetic resistance 90.78 once again on
Friday, as the daily high formed only 8 pips below it. The price did not
move much afterwards, in a price behaviour reminding us of the boredom which
we lived with this pair recently. Last week, we adjusted the lines that
frame the current area, to make the upper limit at Monday’s & Thursday’s top
90.78, which is very close to last Wednesday’s top 90.80, and close to
Friday’s top 90.70. The lower limit is provided by the rising trend line
from 89.61 on the hourly chart, which has been tested several time, before
being broken. This line is currently at 90.33. In case we break the magnetic
resistance 90.78 we will see the Dollar take control, and drive this pair
higher, as we see it targeting the important 91.60 first, then 92.31 which
is important as well. But in case we broke the rising trend line at 90.33,
the price will resume yesterday’s fall which halted at 89.74, confirming the
negative technical outlook which we cheered for all this week. This fall is
expected to target 89.37 & 88.53.
* 90.33: the rising trend line from 89.61 on the hourly chart.
* 89.37: Mar 2nd low
* 88.53: Feb 4th low.
* 90.78: Monday’s high.
* 91.60: Oct 29th high.
* 92.31: Oct 27th high.
Forex Trading Analysis written by Munther Marji
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