Forexpros Daily Analysis Nov 30, 2009
ISM Manufacturing Index
The U.S. Institute of Supply Management (ISM) will publish its monthly Manufacturing Index tomorrow (Dec 1).
The ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states, which tracks the amount of manufacturing activity that occurred in the previous month. The Index is considered a very important and trusted economic measure.
An index value of below 50 usually indicates a decrease in activity, and points to an economic recession, especially if the trend continues over several months.
A value substantially above 50 likely indicates a time of economic growth.
The ISM’s leading quality has been proven over time. During a recession, the ISM’s bottom may precede the turning point for the economic cycle by some months.
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 last month’s value of 55.70 to decrease slightly to 54.80.
Stay updated with the latest announcements by world Central Banks on Forexpros.
The Euro broke the resistance 1.4897 and reached the two suggested targets 1.4948 & 1.4985 successfully on Friday. And This morning it jumped even more, reaching 1.5082. A return to these levels means that last week’s drop was limited, and is probably over with what happened at the kick-off of this week. This seems to be what the odds favor, especially if we take notice of where did Friday’s drop stop (as it is shown on the chart): we stopped only pips above the rising trendline on the 4-hour chart, which is the line that protects the rising trend. Thus, the rising trend did not suffer damage but with small portions only. We should pay attention to the nearby support & resistance levels 1.5043 & 1.5082, because breaking any of them is what is going to set the direction for the next few hours. Breaking 1.5082 means that this rising move has more to offer, and will target 1.5144 & 1.5200. Breaking 1.5043 would initiate a falling correction that would typically target 1.4955-1.4924 and if broken 1.4867.
• 1.5043: intraday support.
• 1.4924-4955: a support area that contains both Fibonacci 50% & 61.8% for the short-term.
• 1.4867: important intraday support from last week.
• 1.5082: today’s high until the moment of preparing this report, and a well known previous resistance.
• 1.5144: resistance area from 2008.
• 1.5200: resistance area from 2008.
Dollar-Yen broke the resistance 86.40 & reached the first suggested target 87.01 with great accuracy (Friday’s high was 87.00). Such an accurate stop at a Fibonacci resistance means that we are still in a down road. We will take Friday’s high as resistance of the day, especially that now it’s not only a Fibonacci level but also a daily high. Today’s resistance is 86.99 and staying below this level means more downside activity. While breaking it would target short-term Fibonacci 61.8% at 87.50, which is an important resistance, and if broken, the Dollar will rise towards the bottom of the supposed wedge formation at 88.33. Short-term support is at 86.16 and is provided by Fibonacci 38.2% and breaking it would mean a continuation of the drop towards the eldest Fibonacci sister (61.8%) at 85.65 first. And since this is the last line of defense before last week’s bottom, breaking it would lead to a test of the last 15 years low 84.81.
• 86.16: Fibonacci 38.2% for the short-term.
• 85.65: Fibonacci 61.8% for the short-term.
• 84.81: yesterday’s low.
• 86.99: Fibonacci 50% short-term.
• 87.50: Fibonacci 61.8% short-term.
• 88.33: the bottom of the supposed wedge formation.
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