Daily Analysis – 13/01/2010

ForexPros Daily Analysis January 13, 2010

Fundamental Analysis: Initial Jobless Claims

Traders anticipate the publication of the Initial Jobless Claims report
tomorrow, January 14.
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 predict no change in the reading which will remain at 434.00K.

Euro Dollar

For the second day in a row, the Euro did not create any major or
technically meaningful moves. We maintained a trading range below Monday’s
top 1.4555, and above the Asian session bottom for the same day 1.4452. It
seems like this trading range is getting tighter & tighter, which is a price
behavior that usually happens before large moves. The borders of this tight
area are drawn with the two small trend lines on the hourly chart which are
at 1.4531 & 1.4464. Thus, breaking any of these levels will move the Euro in
the direction of the break. If we break the resistance 1.4531 the odds of
going above 1.46 will be high, where the attractive targets 1.4625 & 1.4678
await. But if we break the support 1.4464, the Euro will fall again
targeting 1.4409 first, then 1.4331. And as it is the case with all tight
ranges, it is highly preferred not to take a bias towards any direction
before breaking the limits of the tight range.

* 1.4485: the trend line that limits the tight area from below.
* 1.4409: Fibonacci 50% for the short term.
* 1.4331: previous well known support/resistance.

* 1.4531: the trend line that limits the tight area from above.
* 1.4625: Nov 3rd low.
* 1.4678: Fibonacci 50% for the medium term.


Exactly as we have expected, Dollar-Yen broke yesterday’s support 91.70 and
successfully reached the suggested target 90.76, stopping only 5 pips below
it, before bouncing back above 91. As we can see on the attached chart, this
pair has bumped into a support that caused it to bounce more than 60 pips
until now. Reaching 90.76 is expected to provide a chance to create a
correction for the whole fall from 93.75, which will ideally target 91.87 &
92.59. But before talking about such a correction we should see a break of
short term resistance 91.33. If the price goes back to falling, and break
short term support 90.95, the down trend will continue, and will target
90.35, and later the important 89.79.

* 90.95: Fibonacci 61.8% for the short term.
* 90.35: support/resistance area on the 4-hour chart.
* 89.79: Fibonacci 61.8% for the whole rise from 87.35 to 93.75.

* 91.33: intraday top.
* 91.87: Fibonacci 38.2% for the whole move down from 93.75.
* 94.62: Fibonacci 61.8% for the whole move down from 93.75.

Forex Trading Analysis written by Munther Marji for ForexPros.
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