Daily Analysis – 04/11/2009

Forexpros Daily Analysis Nov 4, 2009

Initial Jobless Claims to Be Published in the US Tomorrow

The Initial Jobless Claims is a measure of the number of people who file for unemployment benefits for the first time during the given week. This data is collected by the Department of Labor, and published as a weekly report.

The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.
On a week-to-week basis, claims are quite volatile.

Usually, a move of at least 35K in claims, is required to signal a meaningful change in job growth.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

Analysts forecast 520.00K, down from 530.00K.

Euro Dollar

The Euro broke short-term support 1.4744 and successfully reached the first suggested target 1.4649. But the point where yesterday’s drop stopped, uncovered a very harmonized channel, and price has touched its lines a whole 7 times. Yesterday’s low was exactly at the bottom of that channel, as the attached chart shows (hourly chart). We will monitor this channel to try and specify the direction, and we strongly believe that if this channel is broken to the downside, the medium-term price direction will be in a downtrend. The bottom of the channel is currently at 1.4649 which makes this level the most important support for the short-term. On the other hand, resistance congregate its power in one important area, where we find the falling trendline from 1.5061, the moving average SMA100, and Fibonacci 61.8% for the short-term at 1.4762 (calculated for the 5 waves dropping from 1.4843 to the orthodox bottom 1.4631 and not the price bottom 1.4625), which clearly makes this area the most important of all resistance levels. A break of the 1.4649 support will put the Euro under pressure and that would push it lower to 1.4559, then the important bottom 1.4480, and later to 1.4404. While a break of the resistance 1.4762 ill give the Euro a chance to catch a break and to correct upwards towards 1.4846 and may be 1.4897.

• 1.4649: the bottom of the coordinated channel on the hourly chart, and the most important support for medium-term.
• 1.4559: Fibonacci 38.2% for medium-term.
• 1.4480: Oct 2nd low.

• 1.4762: important resistance area combining Fibonacci 61.8% for the short-term, the moving average SMA100, and the falling trendline from 1.5061..
• 1.4846: Fibonacci 50% for the drop 1.5061.
• 1.4897: Fibonacci 61.8% for the drop 1.5061.


After stopping on Monday, at Fibonacci resistance 90.68 down to the pip, Dollar-Yen stopped yesterday at the moving average SMA100, with the same kind of accuracy. And as you know, stopping near Fibonacci resistance levels (and moving averages as well) is an evidence that the trend in down. That’s why we find ourselves favoring a continuation of the short-term downtrend as long as we are below 90.68. And we will await a break of short-term Fibonacci support 90.21. If we break this support the downtrend will resume, and will target 89.61 first, then 89.07 and may be the important 88.64. The price behavior for the past two days, and the amazingly accurate reversal at the Fibonacci resistance (90.68), makes it the most important resistance, and to add to that, the upper limit of the short-term downtrend (the trendline drawn on the chart), is currently at the same level. And only if it is broken, we will change our negative outlook for this pair. If this surprise happens, we will expect price to reach 91.28 then the important resistance 91.63.

• 90.21: Fibonacci 61.8% for short-term.
• 89.61: previous support & Oct 12th low.
• 89.07: previous intraday support.

• 90.68: Fibonacci 61.8% for the short-term, and the falling line of the downtrend, important resistance.
• 91.28: previous intraday important top.
• 91.63: a well known support area that contained a number of daily tops and bottoms, the last of which was Oct 29th high.

Forex trading analysis by Forexpros – Written by Munther Marji

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