Thursday, August 25, 2011

Daily Technical Analysis - August 25, 2011

Last trading day in Wall Street has been characterized by much volatility. The leading indices have changed direction several times while it seems that the macro-data that reflected a rise of 4% in the orders of sustainable merchandises, as opposed to a prediction of only 2%, has tipped the scale towards a rally at the last minutes of the trade. 

Other news that have contributed to volatility are fears from negative developments related to the debt crisis in Europe, as opposed to cautious optimism from the investors following the speech of the President of the Federal Bank in the USA, Ben Barnanke, as well as the probability of declaration of a third quantity easing plan. In France, the Prime Minister Francois Fillon has announced a vast package of spending cuts in order to cope with the large debts in the country. In addition, the country now expects to grow only 1.75% a year while the previous prediction was of a growth of about 2% a year. 

On the background of all these news, gold has fallen by 5.3%, the sharpest decline in the last three years, a decline of over a hundred dollars an ounce in one single trade day.   

The leading indexes:
NASDAQ  + 0.88%
CC 40        + 1.79%
DAX           + 2.69%  
The leading merchandises

As already mentioned, the Gold has experienced a correction downwards after breaking the record of all times in the course of last week. At the end of the day, Gold has ended at the level of 1763$/oz. As opposed to the Gold, the oil has closed with a light decline of 0.3% to the level of 85.16$ a barrel.  


The significant data that are to be published today at 10:30 (GMT +1) are the "Primary Jobless Claims in the United States", that – according to the forecasts -are expected to reflect a decline to the level of 403 thousands against the previous data of 408 thousands claims.

Market analysis 


The pair has been traded in a bearish tendency despite a light halt in June. In fact, except for the Swiss Franc, it seems that the Sterling is the strongest currency compared to the Euro in this period. For these reasons, and out of fears from the impact of the governmental intervention in Japan and in Switzerland, it seems that the Sterling constitutes the best alternative  and a kind of "safe shore". Technically, it seems that a break-down at the level of 0.8660 might lead an additional course of decline while the next targets for realization might be at the levels of 0.8588 and 0.8470. The stop order might be localized around the level of 0.8750. 


There is a realistic possibility of testing the low level at 0.9927 and a possibility for the continuation of the declines down to the level of 0.9500 in case of a break-down. According to the prices canal that may be watched in the graph, the parity is expected to be traded at levels under 1.0600, but in case it rises above this rate, it is expected to trample at its highest limit and to be at the level of 1.0785.     


Following yesterday's analysis, it seems that the Euro is trying again to create a momentum towards next Friday, when the President of the Fed, Barnanke, will pronounce his speech at the Yearly  Banks Congress in Jackson Hole, while the investors see this speech as being very important regarding the American economic incentivisation.Today, at 14:30 (GMT +1), the American calendar will publish the "Unemployment claims" data with a positive forecast. In case this data reflects the economists' predictions, we will expect the first support point at 1.4375, yesterday's low.  A breakthrough of this level might lead to the next support that also represents Monday's daily low, at 1.4345.   However, if, during the course of the day, the Euro continues the same pattern of rises as the last few days, but manages – this time -  to overpower the dollar, we will expect it to reach around 1.451, as we may see on the daily graph. At this level, the pair will wait for the possibility of non-encouraging news from the yearly economic congress and will try to reach the level of 1.47.