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Mid−Day Forex Technical Report − Consolidations Continue in the Forex Markets

Mon, Aug 18 2008, 12:54 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Consolidations Continue in the Forex Markets

Markets are bounded in tight range today as dollar consolidates and with a light calendar, more consolidation could be seen. Note that while dollar majors are clearly displaying loss of momentum from an intraday point of view, there is no confirmation of a short term top in the greenback yet. The next move will still depend on developments in the commodity markets. In particular, deeper pull back in dollar will be seen broadly if crude oil can rebound to above $116 level. Nevertheless,before that happens, the greenback is still in favor to extend recent rally.

Economic calendar is light today. Canadian international securities transaction dropped less than expected to 7.3b in Jun but USD/CAD showed little reactions to it. Eurozone trade balance unexpectedly showed 0.1b deficit in Jun. Swiss retail sales growth slowed sharply from 7.4% yoy to 0.7% yoy, much lower than expectation of 3.2%. U.K. Rightmove house price index showed average asking price of houses fell -4.8% yoy in Aug, largest decline since at least 2002.

Looking ahead, US NAHB housing market sentiment is expected to remain unchanged at 16. Though, markets might stay calm until German ZEW economic sentiment from Eurozone tomorrow.

More Technical Analysis Reports Here

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.0550; (P) 1.0621; (R1) 1.0661; More.

USD/CAD's pull back from 1.0727 continues today and is now pressing 4 hours 55 EMA (now at 1.0563). With 4 hours MACD turned negative, a short term top should be in place at 1.0727. Further consolidation should now be seen with intraday bias mildly on the downside for deeper correction to 38.2% retracement of 0.9974 to 1.0727 at 1.0439. But downside should be contained above 1.0273 support and bring rally resumption. On the upside, above 1.0695 minor resistance will suggest that recent rise from 0.9974 has resumed for mentioned 1.0791/98 cluster resistance.

In the bigger picture, medium term rise from 0.9056 is still in progress towards mentioned cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.

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Published on  Mon, Aug 18 2008, 13:05 GMT