Technical Analysis Daily 18 Sept 07


Interval: H1
Support - 228.15, 227.37
Resistance - 230.84, 231.44


We are currently encountering a very interesting situation on the GBPJPY market. Why? Due to the fact that we are getting closer to the markets decision to what to do next. The current corrective movement (Pic. 1, K2) reached the 88.6% of the previous correction, and later formed a pro decrease candlestick formation; i.e. the shooting star formation (Pic. 1, pink rectangle). This suggests that the bears are growing in power. The question is: how long?? The first level of resistance will be the level of the precious bottom at 228.15. On the other hand I believe that breaking the level of 227.37 will be a strong declaration of the power of the bears. If this level is broken than I believe that the market could even fall to the level of 221.83. Stops are possible though, on the levels of 224.02 and 222.77.

On the other hand the market could bounce off the levels of the previous bottoms and return to the increase trend. A strong signal to this would be the breaking of the 230.84 and 231.44 levels.

Pic. 1

By: X-Trade Brokers DM S.A.


Euro taking advantage of a weak USD to climb high

The Euro is hovering not far from its record highs as it waits for direction from the US Federal Reserve. The German ZEW survey is due out tomorrow and we expect a sharp drop in business confidence as the problems in the credit markets drive borrowing costs higher. As a major exporter, Germany is especially vulnerable to a global slowdown. Although this will probably weigh on the Euro the impact should be limited as the real action in the currency pair may not come until 2:15pm EST, when the Federal Reserve makes their monetary policy decision. If the Fed only reduces rates by 25bp, we may see a near term top in the EUR/USD. We are also expecting Swiss industrial production. The SNB was surprisingly hawkish last week and the market expects the numbers to confirm their rosy economic outlook.

The following technical analysis gives us a detailed lookout on what is expected to happen to EUR/USD.

The buying point is at 1.3858; based on breaking of the standard error channel lower line

  • Previous resistance is the take profit at 1.3928
  • Fibonacci retracement 38.2% is the stop loss at 1.3785

The selling point is at 1.3760; based on a strong correction and failure to reach higher then 1.3885

  • Fibonacci retracement 61.8% is the take profit at 1.3697
  • Previous resistance is the stop loss at 1.3885

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages below the zero line, the shorter term moving average is faster than the long term and is pointing upwards with break of zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction bouncing on 30% line.

The momentum oscillator is very important to understand the strength of the market and as we see on the graph; it break the zero line and moving upwards. The Stochastic oscillator bounces on 20% line and continues to go higher.

* The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.

By : Finotec Group Inc.

GBP/USD 1.9981

GBP/USD Open 1.9939 High 2.0245 Low 2.0088 Close 1.9951

In upward direction resistance is 2.0005, followed by 2.0162, which is 62.3% correction of the drop from the top 2.0361 to last night's bottom 1.9877. Next resistance is the top from 9 August 2.0394, Support is 1.9818, which is 75.5% correction of the climb 1.9656 - 2.0393. Following is 1.9763 and the bottom from 17 August, which gave the beginning of the above mentioned climbing.

Technical resistance levels: 2.0005 2.0162 2.0393
Technical support levels: 1.9818 1.9763 1.9656

Trading range: 1.9995 - 1.9910

Trend: Downward

Sell at 1.9981 SL 2.0011 TP 1.9921

Already made +22 pips profit on GBP/USD today from the following signal:

5:16 GMT Sell GBP/USD at 1.9905 SL 1.9931 TP 2.9845 TP reached at 5:54 GMT

By : iForexc.

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