ForexPros Daily Analysis January 27, 2010


Fundamental Analysis: US Core Durable Goods Orders

Traders look forward to the publication of the Core Durable Goods Orders tomorrow (January 28). It measures the change in the total value of new orders for durable goods, excluding transportation.
Because aircraft orders are very volatile, the core number gives a better gauge of orders trends.
Higher reading indicates activity increase by manufacturers.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD. The previous reading was at 2.00% which analysts predict will decline to 0.40%.

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Euro Dollar

As we get closer and closer to 1.4014, with reaching 1.4040 yesterday, 1.4014 will stay at the center of our focus for another day . The Euro kept a bottom at 1.4027, which is very close to the most important support at the moment 1.4014. While the rising attempts stopped just shy of the falling trend line from 1.4554. Today’s resistance is at this trend line in specific which runs currently at 1.4116. As for the support we will put all our attention at 1.4014 and not any level before it. Breaking resistance of the day would initiate a strong rise targeting Fibonacci levels at 1.4237 & 1.4302. But if the all important support 1.4014 is broken, the strong & sharp drop from 1.4577 that has gained 550 pips until this moment will carry on, strongly, and will target 1.3928 & 1.3857. We have a very interesting day ahead of us, let’s enjoy it.

Support:
• 1.4014: Fibonacci 50% for the long term (for the rise from 1.2885 to 1.5143).
• 1.3928: Jul 15th low.
• 1.3857: May 26th low.

Resistance:
• 1.4116: the falling trend line from 1.4554 on the hourly chart.
• 1.4237: Fibonacci 38.2% for the whole drop from 1.4577.
• 1.4302: Fibonacci 50% for the whole drop from 1.4577.

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USD/JPY

Dollar-Yen penetrated the important 89.79 once again, but this time, we had a close below it, and reached 89.12. The importance of 89.79 comes from the fact that it is Fibonacci 61.8% for the whole rise from 87.37 to 93.75. And with breaking it, any bias towards the Dollar has lost its best advocate! But on the other hand, we noticed a trend line that deserves attention, and has provided support 4 times in the past. Price has touched and slightly went below this line in the past few hours. If this line is to provide support, 89.12 must not be broken. In this case we will witness attest of the resistance 89.69, and if broken then the price would have found support around the above mentioned trend line and started rising again, targeting 90.30 & the most important resistance for now 90.90. The other scenario is to break 89.12, in this case the price will continue to capitalize on the break of 89.79 and will head on to 88.30 & 87.72.

Support:
• 89.79: Fibonacci 61.8% for the whole rising move from 87.35 to 93.75.
• 88.91: Dec 18th low.
• 88.30: Dec 14th low

Resistance:
• 90.30: previous important support.
• 91.06: Fibonacci 50% for the short term.
• 91.64: the falling trend line from 93.75.

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Forex Trading Analysis written by Munther Marji for ForexPros.

For information on currency trading see ForexPros.

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