Daily Analysis – 17/08/2010

ForexPros Daily Analysis August 17, 2010

Fundamental Analysis: MPC Meeting Minutes

The Bank of England (BOE) Monetary Policy Committee (MPC) Meeting Minutes
are a detailed record of the committee’s interest rate meeting held about
two weeks earlier.
It gives a picture of economic conditions in the UK. It also records the
votes of the individual members of the Committee
If the BoE is hawkish about the inflationary outlook, it should be taken as
positive/bullish for the GBP.

Euro Dollar

As the new week started, The Euro consolidated just below Friday’s low,
reaching 1.2733 before rebounding fast to 1.2869. Such a rebound is
considered very “modest” comparing to the drop it followed, which came very
close to 600 pips! We can clearly see that we have not even reached the
first Fibonacci level 38.2%. Technically, the most important event was
dropping to another important trend line, which is the rising trend line
from June 7th low (please refer to the attached chart). This line which was
tested accurately yesterday, is at 1.2759. But before we think about it,
there is another support worth mentioning which is 1.2822. If this level is
broken, we will be already on the way to test the important trend line at
1.2759 as a first target, and if broken we will see the Euro dropping hard
to 1.2660. On the other hand, yesterday’s trading showed that resistance is
at 1.2872. Only with a break here will the Euro be able to move forward. If
we get this break, we think that the price will rise with the target of
reaching Fibonacci levels 1.2962 & 1.3033.

* 1.2822: the rising trend line from yesterday’s bottom on the intraday
* 1.2759: the rising trend line from Jun 7th low on the hourly chart.
* 1.2660: Jul 6th high.

* 1.2872: previous well known resistance.
* 1.2962: Fibonacci 38.2% level for the drop from the 3-month high of
* 1.3033: Fibonacci 38.2% level for the drop from the 3-month high of


Let’s leave the daily & weekly charts we have been obsessed with lately, and
just focus on the hourly chart. We can see that there is a very exciting
trend line, dropping from June 4th top. This line is almost at 86.21: the
resistance which the price tried to break on Friday, but left it alone
shortly after that. Therefore, all of our attention is at the exciting trend
lien & the importance it provides. As long as we are trading below this
line, the downtrend will be ok, but if we break the resistance 86.21 we will
shoot up targeting 87.00 and may be 87.70. Where if we go back to trade
below the support 85.00, there will be nothing stopping the price from
reaching our awaited target 83.85, and may be at a later time we will see
82.65 as well.

* 85.00: Aug 6th low.
* 83.87: Fibonacci extension level 138.2% for the falling wave from 86.86,
compared to the wave which started at 88.10.
* 82.65: the trend line combining the monthly lows of Dec 08, Jan & Nov 09,
on the weekly chart.

* 86.21: the falling trend line from June 4th top on the hourly chart, and
Aug 10th top.
* 87.00: Jul 7th low.
* 87.70: June 26th top.

Forex trading analysis written by Munther Marji for Forexpros.

Trading Futures and Options on Futures and Cash Forex
transactions involves substantial risk of loss and may not be suitable for
all investors. You should carefully consider whether trading is suitable for
you in light of your circumstances, knowledge, and financial resources. You
may lose all or more of your initial investment. Opinions, market data, and
recommendations are subject to change at any time.