• Home ::
• Technical ::
• Analysis Reports ::
• Daily Forex Technical Report

• Send
• Print
• Add To
• Rss

Daily Forex Technical Report

cc8f0151-c663-4759-be9d-d824108fa38b

1

0

Daily Forex Technical Report − Dollar at Important Support Levels ahead of Bernanke and Paulson

Tue, Sep 23 2008, 07:44 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Dollar at Important Support Levels ahead of Bernanke and Paulson

Dollar recovers mildly after yesterday's sharp fall which saw the greenback having the biggest decline against Euro since its inception yesterday. There are several uncertainties in the $700B bailout plan Paulson. Firstly, there are speculations that some politicians will oppose the passage of the plan which result in delay of the rescue of the financial sector. Secondly, markets are unconvinced on whether the $700B bailout package could really save the US economy from recession. Thirdly, markets are concerned that such rescue plan will increase US's debt ceiling by 6.6% to $11.3T. More volatility is expected in the coming days as the story continues to develop. Meanwhile, main highlight of today will be testimony of Bernanke and Paulson to Senate Banking, Housing and Urban Affairs Committee.

Technically speaking, we'd like to emphasize that dollar is now at an important support zone. Dollar index is drawing support from 50% retracement of 71.31 to 80.38 at 75.85 and 55 days EMA at 76.37. EUR/USD and GBP/USD are both at important structure resistance zone of 1.4629/4908 and 1.8512/8794 respectively.USD/CHF is rebounding from 50% retracement of 1.0010 to 1.1416 at 1.0713. We have been treating dollar's fall in the past two weeks as correction to a larger medium term up trend only. And, if this view is correct, the current price levels should be the place where dollar forms a short term bottom and stage and strong rally. So the development in the next few days will be critical to the medium term outlook.

On the economic data front, just released, Germany Services PMI and manufacturing PMI deteriorated further to 49.3 and 48.1 in Sep respectively. Main focus in the Eurozone will be on Manufacturing PMI and Services PMI which are both expected to show further deterioration. Canadian CPI will take center stage in US session ahead of Bernanke and Paulson's Testimony to Senate.

More Forex Technical Analysis Reports Here.

For Crude Oil and Gold analysis, click here

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.4517; (P) 1.4692; (R1) 1.4948; More

EUR/USD retreats mildly after surging to as high as 1.4867 yesterday. As discussed before, rise from 1.3881 is treated as correction to decline from 1.6038 only and has already met the target of 1.4629 and 1.4908 resistance zone. Considering that EUR/USD is now close to key near term resistance of 1.4908 (138.2% projection of 1.3881 to 1.4481 from 1.4071 at 1.4900), intraday outlook is turned neutral for the moment.

On the downside, below 1.4542 will be support will be the first alert that rebound from 1.3881 has completed. Further break of 1.4150 support will confirm this case and bring retest of 1.3881 low and key medium term support at 1.3851. On the upside, however, sustained break of 1.4908 resistance will dampen this view and bring stronger rally towards 1.5284 resistance

In the bigger picture, medium term up trend from 1.1639 has completed at 1.6038, after a double top reversal pattern (1.6019, 1.6038) and subsequent decisive break of medium term rising trend line support. A short term bottom is in place at 1.3881, above key medium term support at 1.3851 (50% retracement of 1.1639 to 1.6038 at 1.3839). Rebound from there is treated as correction to fall from 1.6038 only and is expected to complete in 1.4629 and 1.4908 resistance zone. The whole decline from 1.6038 is still expected to extend further after completing the correction. Sustained trading below 1.3851 will indicate that fall from 1.6038 has resumed to next target of 61.8% retracement of 1.1639 to 1.6038 at 1.3319 first. On the upside, sustained break of double top neckline resistance at 1.5284 is needed to confirm decline from 1.6038 has completely finished. Otherwise, medium term outlook will remain bearish.

Stay tuned with our Forex Newsletters

ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.

Published on  Tue, Sep 23 2008, 07:48 GMT