Fundamental Analysis: CB Consumer Confidence
Traders of the US anticipate the Consumer Confidence to be published tomorrow June 29. 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. 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 62.00.
After its break of the small descending channel, the Euro reached its target for this break which is a test of the top of the main descending channel for the 3rd time! It touched, and slightly surpassed, the top of this channel (please refer to the attached chart). There is nothing more important than this test, for the short, and medium terms! But, we need a confirmation of this break: first we need the Euro to keep trading above the top of the channel, and then we need it to break the Asian session high 1.2396. If the Euro manages to provide what is needed, we will completely change our negative outlook for this pair. This is why today’s levels will be support at 1.2358 & resistance at 1.2396. If we break the resistance, this will prove that the Euro is capable of capitalizing on the break of the channel, and flying higher. The targets for this break will be 1.2519 & 1.2655. On the other hand, if we drop back inside the channel, this will indicate running out of steam, and the end of the upside adventure! In this case, the case of breaking the support 1.2358, this pair will give up gains and start dropping. Targets will be 1.2260 and may be later 1.2170.
• 1.2358: the retest level for the broken channel.
• 1.2260: Thursday’s low.
• 1.2170: Fibonacci 50% for the whole rising move from this cycle’s low to last week’s high.
• 1.2396: Asian session high.
• 1.2519: May 6th low.
• 1.2655: May 11th low.
The Dollar/Yen continued to drop slowly, in yet another confirmation that the bears are beating the bulls! USDJPY broke the support specified in Friday’s report 89.40, and reached a new bottom for this recent falling trend at 89.20. This confirms the negative technical outlook we have seen lately. And we believe it will persist as long as we are trading below the falling trend line from June 14th top, which is currently at 90.86. Short term support is at 89.20, and breaking it will be another evidence that we are going down. This break will target 87.99 & 87.35. Last week’s important support at 90.32 will turn into a resistance for today. Breaking this level will give this pair a chance to test the important trend line at 90.86, and if this one is broken, things will go against our outlook, as we will target 92.07. This pair is going as expected, in the expected direction, and in convergence with our negative technical outlook for the short & medium terms. We expect the fall to go on, but we hope to see it go faster, and more exciting.
• 89.20: Friday’s low.
• 87.99: May 6th low.
• 87.35: Dec 9th 2009 low.
• 90.32: Wednesday’s support which has turned into a resistance on the hourly chart.
• 90.86: the descending trend line from Jun 14th top on the hourly chart.
• 92.07: the important resistance area holding Jun 7th & 14th.
Forex trading analysis written by Munther Marji for Forexpros.
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