ForexPros Daily Analysis June 2, 2010
Fundamental Analysis: ADP Nonfarm Employment Change
Traders of the US anticipate the publication of the ADP Nonfarm Employment Change tomorrow June 3. The report is a measure of the monthly change of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents approximately 400,000 U.S. business clients. This release, 2 days before the government-released employment data, is a good predictive to the government’s non-farm payrolls data. The change in this indicator can be very volatile. 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 56.00K, a significant change from the past reading of 32.00K.
The Euro dropped strongly, as it broke the support specified in yesterday’s report 1.2283, and successfully reached the first suggested target 1.2142, and a new cycle low(just as expected) at 1.2110, which is a level not seen since 2006! We expressed confidence in this scenario in yesterday’s report, when we said “we still believe that the drop to a new cycle low below 1.2142 is only a matter of time”. And even after this “dive”, we still believe that the Euro is ready to dive even more, and we still believe that the most important resistance is Fibonacci 61.8% at 1.2456! We do not see any reason to change our negative technical outlook for as long as the price is below it. And since that the price has touched the channel top, and came close to Fibonacci then it started to fall, then the negative outlook is still here, strongly! As for the short term the support is at 1.2200, and breaking it will drag the Euro to test this fresh cycle low 1.2110 again, and then to test the important psychological level 1.2000. The resistance is at 1.2279, which combines the top of the falling channel on the 4-hour chart (after adjusting it very slightly) and Fibonacci 61.8% for the drop from yesterday’s high. Breaking it indicates a continuation of the rising correction which will target 1.2390 first, then its ideal target: Fibonacci 61.8% at 1.2456. It goes without saying that this is the single most important resistance for the time being, and the separating point between a continuation of the current downtrend, and a reversal to an uptrend! We still believe that the drop to a new cycle low below 1.2110 is only a matter of time, nothing will change that except for a break of 1.2456.
• 1.2200: Fibonacci 61.8% for the short term, which was tested more than once during the Asian session.
• 1.2110: yesterday’s low, and the new cycle’s and 4-year low.
• 1.2000: important psychological level.
• 1.2279: the top of the rising channel on the hourly & 4-hour charts after adjusting it very slightly, and the short term Fibonacci 61.8% resistance.
• 1.2390: Fibonacci 50% for the drop from 1.2670.
• 1.2456: Fibonacci 61.8% for the drop from 1.2670.
The Dollar/Yen came closer than ever to the all important resistance 91.84, stopping only 8 pips below it, which could be considered as a test of some sort! But we still believe that there is a chance to come even closer to this important level on the short term, and that we could actually “touch” it before we drop! But in order for it to hold to these chances, the price should hold above the 91.24 support, which is provided by the rising trend line on intraday charts. And although we notice that this is an important level, the resistance 91.84 is still the most important level for this pair right now! It is the separating level between a positive & a negative medium term outlook. If price stops at or around 91.84, the odds of going back down will be enormous, and a top around here could provide us with a wonderful chance to sell for medium term. But if broken, we will see a strong jump to 92.95 and may be 93.65. As we said, support is at 91.24, and if broken, the price will retreat to 90.36 then to the very important 89.72. We still believe that 91.84 is still the most important medium term resistance for now, while the medium term support is at 89.72.
• 91.24: the rising trend line from yesterday’s low on intraday charts.
• 90.36: short term 50% Fibonacci level (for the rising move from 88.96).
• 89.72: the slowly rising trend line on hourly chart.
• 91.84: Fibonacci 61.8% for the short term, the most important resistance at all for the time being.
• 92.95: May 18th high.
• 93.65: Apr 6th low.
Forex Trading Analysis written by Munther Marji for ForexPros.
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