Forexpros Daily Analysis March 15, 2010
Free webinar on ForexPros – Identifying Low Risk, High Reward, and High Probability Trading Opportunities For Swing and Longer Term Forex Traders.
Expert: Sam Seiden
When: Thursday, Mar 18, 2010, 10:00 EST
During this session, we will apply what we learned during session one to the world of swing and longer term trading in the Forex markets. We will walk through the trade selection process, applying our rule based strategy to identify price levels where demand and supply are out of balance and where profit margins are large offering us significant risk/reward opportunities for Forex swing and position trading.
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Fundamental Analysis: Interest Rate Decision
Traders of the US await the publication of the Federal Open Market Committee (FOMC) decision on short term interest rate.
The decision on where to set interest rates depends mostly on growth outlook and inflation. The primary objective of the central bank is to achieve price stability. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency. A higher than expected rate is positive/bullish for the USD, while a lower than expected rate is negative/bearish for the USD. Analysts predict a reading of 0.25%.
The Euro rose breaking the resistance 1.3734, jumping 60 pips above it, coming very close to 1.38, but without reaching the first suggested target 1.3838. This expected rise came as a result of breaking the triangle to the upside, and the positive technical outlook which followed this break, and we have talked about it on Friday. To maintain this positive outlook, the Euro should hold above the most important support for the short term 1.3635. But of course, a correction won’t harm the outlook, as long as it holds above this support. The closest short term support is 1.3726, and breaking it would indicate a normal correction after the last rise, with the ideal target at 1.3635, the most important support for the time being. Only if this level is broken that we expect further downside activity targeting 1.3543. As for the resistance it is at 1.3768, and breaking it would indicate a continuation of the rise that followed the triangle break. The targets for such a break would be the important 1.3838, and after that we might see 1.3928, as the Euro tries to approach the important 1.40 landmark.
• 1.3726: important intraday support.
• 1.3635: the retest level for the broken trend line with in the triangle formation.
• 1.3543: Mar 10th low.
• 1.3768: Fibonacci 61.8% for the short term.
• 1.3838: Feb 9th high.
• 1.3928: Jul 3rd low.
Although the Dollar-Yen reached a new top for this cycle on Friday at 91.07, it closed slightly down, at only 5 pips below the open price, which makes this day a candidate for a “Reversal Day” pattern. Also, the very small real body for Friday’s candlestick makes it very close to a “Doji” pattern, and if we want to be extra specific we can refer to it as a “Shooting Star” candle pattern. All these indications give us one direction: down. Short term support is provided by the rising trend line from 89.61 on the hourly chart, which is currently at 90.33. If broken, this positive outlook will get the support it needs to push down. The next set of targets will be 89.61 & 89.04. As for the resistance it is at 90.76, and in case it is broken, the price will contradict all these technical signals, and would jump strongly to 91.60, and may be later to the important 92.31.
• 90.33: the rising trend line from 89.61 on the hourly chart.
• 89.61: Mar 9th low.
• 89.04: Nov 24th high.
• 90.76: Fibonacci 61.8% for the short term.
• 91.60: Oct 29th high.
• 92.31: Oct 26th high.
Forex trading analysis by Munther Marji for ForexPros.com.
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