ForexPros Daily Analysis March 16, 2010
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Fundamental Analysis: BoJ Press Conference
March 17th: Bank of Japan will be holding a press conference, their preferred method of communicating with investors. Topics at such conferences generally include economic outlook, inflation and changes in interest rates.
We said yesterday “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.” And it seems that the Euro was eavesdropping! The price broke the support 1.3726, and dropped as expected in a correction which stopped only 3 pips before the “ideal target” 1.3635! As we can see in the chart, yesterday’s low was close to 2 important support levels: the upper line in the triangle & Fibonacci 61.8%.Thus, the outlook is still positive and will be as long as we are above 1.3635. This is the “support of the day” & if broken, we expect the Euro to drop strongly, and target 1.3543 first, and may be the important 1.3480 after that. The resistance is at 1.3743 & breaking it would indicate a resumption of the uptrend that followed the break of the triangle. The next set of targets will be the important 1.3838, and may be we will see 1.3928, while the Euro approaches the 1.40 important landmark.
• 1.3635: Fibonacci 61.8% for the short term.
• 1.3543: Mar 10th low.
• 1.3480: the rising trend line from 1.3442 on the hourly chart.
• 1.3734: Fibonacci 61.8% for the short term.
• 1.3838: Feb 9th high.
• 1.3928: Jul 3rd low.
After yesterday’s report was issued, the Dollar-Yen rose to 90.78 (2 pips above the resistance of the report 90.76), then the expected drop started breaking the support 90.33, and reached 89.97 so far. Although the downtrend did not reach its expected targets, and hardly gained 80 pips from yesterday’s top, but we believe that the technical evidences have triumphed. And today they are still pointing lower, especially after breaking 90.33. We expect the “shooting star” pattern that happened on Friday to keep pressuring the price, driving it down. Short term resistance is at 90.47 which combines Fibonacci 61.8% for yesterday’s drop, with the retest level of the rising trend line from 89.61 which was broken yesterday. The downtrend will be ok as long as we are below this level. But if it is broken, the direction will be opposite to all the technical evidences that point down. And the price will jump to 91.07 & 91.60. While the support is at 90.02, and breaking it would indicate a continuation of the drop which started yesterday at 90.78. The next set of targets will be 89.37 & 88.72.
• 90.02: important intraday support.
• 89.37: Mar 2nd low
• 88.72: Feb 26th low.
• 90.47: Fibonacci 61.8% for the short term.
• 91.07: Friday’s low.
• 91.60: Oct 29th high.
Forex Trading Analysis written by Munther Marji for ForexPros.
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