ForexPros Daily Analysis June 7, 2010
Fundamental Analysis: Nationwide Consumer Confidence – GBP
European traders look forward to the publication of the UK Nationwide Consumer Confidence. It 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. The figure is calculated from a survey of about 1,000 consumers
A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP. Analysts predict a future reading of 78.00.
As expected, the Euro broke the support 1.2152, and successfully reached both suggested targets 1.2068 & 1.2000. The Euro fell below 1.20 for the first time since March 2006, but this drop was not a surprise to anyone, according to the negative technical outlook which we have adopted in the past days & weeks. Breaking below 1.20 opens the door for guessing the long term targets in these areas, the question now is where are these targets? In our opinion, we believe that there is one target, one point, which stands out of the crowd, and that is 1.1211, which will be our target for the next few weeks. The importance of this level is that it is the 61.8% Fibonacci for the whole move from the historical low to the historical high. Short term support is at 1.1911, and if broken the Euro will continue its drop to 1.1825, and then 1.1754. The resistance is at 1.1963, and breaking it will give the chance for the Euro to catch a break, and rise to the important 1.2085 & 1.2161.
• 1.1911: the rising trend line from the Asian session low on intraday charts.
• 1.1825: Feb 27th 2006 low.
• 1.1754: Dec 6th 2005 low/
• 1.1963: important intraday level.
• 1.2085: Fibonacci 61.8% for the last drop from 1.2214.
• 1.2161: the top of the falling channel on the 4-hour chart.
The Dollar/Yen stopped just before 92.95 (Friday’s high was 92.87), and started to drop, drifting away from this new challenge which it’s obviously not ready for yet! The price then dropped, breaking the support specified in the report 92.22, and reaching the first suggested target 91.36 successfully. The current drop stopped just before the Fibonacci 50%for the short term at 90.90 (the low until the moment of preparing this report is 90.90). This indicates that this level is important for stetting the direction of the short term. If the price holds above this level we believe it can challenge Friday’s top, and the important resistance 92.95, if not today then later in the week. Short term resistance is at 91.59 and if broken the technical outlook will improve, and the price will target 92.15 first, then the important 92.95. The support is at 90.90 which proved important this morning. If broken, we will seethe price dropping to 90.44 & then 89.80.
• 90.90: Fibonacci 50% level for the rising move from 88.96.
• 90.44: Fibonacci 61.8% level for the rising move from 88.96.
• 89.80: hourly support.
• 91.59: important intraday level.
• 92.15: Fibonacci 61.8% for the short term.
• 92.95: May 18th high.
Forex Trading Analysis written by Munther Marji for ForexPros.
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