Thursday, July 7, 2011

Forex Daily Technical Analysis - July 7, 2011

US stock markets rose yesterday despite disappointing manufacturing data. Nasdaq is steal leading the markets towards its high at 2410 points, whereas the S&P 500 rises as well, but slower.  A bull-flag pattern was created under the resistance at 1340 points in the S&P 500, and improving economic data might help the index to break-through the resistance towards the high at 1370. However, a break-down of the recent days' lows might start a correction.

Stay updated with today's important events, such as EUR & GBP interest announcement and employment data in the US & Australia.


EUR/USD

The EUR has made the expected correction, which was more powerful than we had estimated. However, the real direction will be determined during the ECB press conference.

Technically, the EUR broke through the 50% Fibonacci level and made a "lower-high" pattern, which is a negative signal for the currency. The good news for the Euro is that the lows are still in "higher-lows" pattern, so it is too soon to declare for a victory of the bears. A possible target for the current correction might be the lower edge of the triangle at 1.415.

Watch out for trading while the bid rate announcement- it could be extreme volatile and dangerous.


GBP/USD

It looks like the reversal in the pound did occur, but alike the EUR situation- there might be some surprises during the release  of the official bank rate.  The pound broke the support of the 200 SMA and almost reached the target that was set by Sunbird's chief analyst at 1.59. If this turnover is real, a break-down of 1.59 might cause sharper declines to the lower boundary of the channel at 1.580-1.583.


USD/JPY

The USD isestablishing the estimation that it is about to make a move against the JPY, and now deals with the strong resistance of the sellers at 81.20. The 20 MA is supporting the recent lows; Buyers are pressuring the price up and created a bullish-triangle in the daily chart.

 A strong break-up of the resistance, combining with a cross of the 20&50 EMAs, might stress the short holders and cause a strong short-squeeze towards the 200 SMA  - around 82.0. 

Nevertheless, it is important to remember that traditionally the Yen is stronger than the USD, so you have to stay alarmed in case it breaks-down 80.50.



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