ForexPros Daily Analysis June 22, 2010
Fundamental Analysis: MPC Meeting Minutes
European traders anticipate the MPC Meeting Minutes. The Bank of England (BOE) Monetary Policy Committee (MPC) Meeting Minutes are a detailed record of the committee’s interest rate meeting held about two weeks earlier. It gives a picture of economic conditions in the UK. It also records the votes of the individual members of the Committee. If the BoE is hawkish about the inflationary outlook, it should be taken as positive/bullish for the GBP.
The Euro broke the support specified in yesterday’s report, the important 1.2389, and dropped back below 1.23, hitting 1.2282 during the Asian session, but without being able to reach the suggested target 1.2240. When looking at the attached chart, we immediately realize that this retreat could mean a lot. It came from the top of the hourly chart rising trend channel, exactly, and started a strong fall. That is why we expect this drop to go on, and keep escaping further away from the channel top. And since the bottom of this channel is already below 1.20, we expect the price to go below 1.20 on the medium term. As for the short term, the Asian session low which was tested twice 1.2282, will be support of the day. If broken, the price will keep dropping, targeting Fibonacci retracement levels for the whole rise from this cycle’s low 1.1875. These levels are at 1.2170 & 1.2100, which became a critical medium term level. Today’s resistance is at 1.2348, and in case the price succeeds in breaking above it, it will give itself a chance to test the top of the channel yet again. The top of the channel will be the first target of this break, at 1.2457, and if broken, we will jump to 1.2519.
• 1.2282: Asian session low.
• 1.2170: Fibonacci 50% for the whole rising move from this cycle’s low to yesterday’s high
• 1.2100: Fibonacci 61.8% for the whole rising move from this cycle’s low to yesterday’s high
• 1.2348: important intraday level.
• 1.2457: the top of the rising trend channel of the hourly chart.
• 1.2519: May 6th high.
The Dollar/Yen successfully jumped to the broken trend line we talked about previously, and performed a classic retest move, very accurate, before dropping 75 pips, in yet another confirmation that the bears are beating the bulls! With this classic retest, the break of the rising trend line from May 20th will continue to have a tremendous effect on the short term direction, and may be the medium term as well. But, we need a break of today’s support at 90.75 to say that we are on the way to the same set of targets we suggested yesterday. Meaning, if we break 90.75, we will target 89.81 first, and may be 88.96 later. On the other hand, it is required to keep trading below the falling line descending trend line from June 14th high, in order for the negative technical outlook to keep prevailing. This important line is running currently at 91.25. If we keep trading below this level, it will probably fall more & more. But, if we break above this level, the Dollar will say no to the downside scenario, and will test the area which stopped the rise twice on June 7th & June 14th at 92.07, and then 92.56.
• 90.75: Fibonacci 61.8% for the short term.
• 89.81: May 26th low.
• 88.96: May 20th low.
• 91.25: the descending trend line from Jun 14th top on the hourly chart.
• 92.07: the important resistance area holding Jun 7th & 14th.
• 92.56: Apr 13th low.
Forex trading analysis written by Munther Marji for Forexpros.
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