ForexPros Daily Analysis May 24, 2010
Fundamental Analysis: GDP (QoQ)
European traders anticipate the publication of the UK GDP. The Gross Domestic Product is the broadest measure of economic activity and is a key indicator for the economy’s health. The quarterly percent changes in GDP shows the growth rate of the economy as a whole. A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP. Analysts predict a future reading of 0.30%.
After the rocketing rise, from 1.2142 to 1.2670 late last week, the Euro retreated back to 1.2480. This drop has came very close to the rising trend line from this cycle’s low on the hourly chart 1.2142, which is currently at 1.2492. We believe that a break of this line (in case it happens) will be the technical event of the day. We can not just guess the direction before the test of this line. The general trend is down, but the rise from 1.2142 has shown enormous strength. In such a case, waiting for the test of the trend line is the best thing one can do. In case this support is broken the rocketing short term trend will be over, and the Euro will be back to falling, and going along with the general trend. Today’s targets will be 1.2406 & then 1.2295. In case this resistance is broken, the price will continue its advance upside, and the targets for the next 24 hours will be 1.2639, and the very important 1.2729.
• 1.2492: the rising trend line from Wednesday’s lows on hourly chart.
• 1.2406: Fibonacci 50% for the rise from this cycle low, and the 4 and a half years low.
• 1.2295: important intraday bottom from Thursday’s trading.
• 1.2545: the falling trend line on intraday charts.
• 1.2639: important intraday resistance.
• 1.2729: Fibonacci 61.8% for the drop from 1.3092.
The dollar started to balance itself above 90 in the past few hours, and it became in a good position to “attack” the falling trend line on hourly chart. This line is currently at 90.32, only pips below the current price. Will we see the Dollar breaking this line and rocketing up? Today, Dollar’s strength will completely depend on its ability to break the resistance 90.32. If the Dollar can push the Yen above this resistance, we will witness a strong rise, targeting 91.29 & 91.84. The latter is the most important resistance for the short (and may be medium) term for now. The support is at 89.56 and breaking it (if it happens) will target 88.96 itself & 87.99. The downtrend needs to hold below the falling hourly trend line to keep things going smoothly (at 90.32). If broken, the short term negative technical outlook will change dramatically. The yes in still the one wearing the pants in this relationship, but beware of 90.57.
• 89.56: the rising trend line from Thursday’s low.
• 88.96: yesterday’s low, and a previous very important support.
• 87.99: Mar 6th low.
• 90.32: the falling trend line on the hourly chart.
• 91.29: Fibonacci 50% for the short term.
• 91.84: Fibonacci 61.8% for the short term.
• 93.49: previous hourly resistance.
Forex Trading Analysis written by Munther Marji for Forex Pros.
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