ForexPros Daily Analysis April 21, 2010


Fundamental Analysis: BoC Monetary Policy Report

Canadian traders anticipate the publication of the reports published by the Bank of Canada. The bank lists four such reports yearly, in which it announces its projected views for the Canadian economy over the next two years.

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Euro Dollar

After yesterday’s price behavior, the Euro continues to fluctuate, without being able to create major meaningful moves. This behavior has forced us to re-draw the falling channel which we presented yesterday, to include yesterday’s high. And although there are a few pips outside the channel on both sides, this channel looks solid, and it deserves our attention. As we can see on the attached chart (the hourly chart), there is a descending channel with two bottoms on its lower trend line. This channel is the guardian of the falling trend, and its top at 1.3471 provides the most important resistance. If the price stays under this level, and continued to trade within the channel, more downside activity is to be expected. But, if we break this resistance, the price will contradict our hypothesis of a downtrend, and will start to rise and target 2 important resistance levels 1.3577 & 1.3675. On the medium term, the break of 1.3437 indicates a good chance to fall, but this break still lacks consistency. In case we trade with stability below 1.3437, the price will be expected to fall both on short & medium terms.

Support:
• 1.3437: Fibonacci 61.8% for the long term.
• 1.3340: Apr 9th low.
• 1.3266: Mar 25th & 25th low, and the last 9 months low as well.

Resistance:
• 1.3471: the top of the falling channel on the hourly chart.
• 1.3577: short term 61.8% Fibonacci.
• 1.3675: the horizontal resistance which stopped the price twice and caused the current drop.

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USD/JPY

After holding close to 91.66on Monday, the price started to rise from this Fibonacci support, and continued all the way until it achieved the “surprise” and started trading above the previously broken trend line. This very strong rise from the bottom which came only 8 pips below Fibonacci at 91.66, indicates that the trend is up. But, in order for the Dollar to maintain gains, it is preferred to keep trading above 93.21, and if this support is broken we will fall to the most important support currently 92.48. This support in specific is the separating line between the uptrend & downtrend. As we said, bouncing from Fibonacci level is an evidence in favor of the uptrend, This should be followed by holding above this support. On the other hand, if this level is broken, the price will 91.82. The resistance is at the level which caught our attention during the past 2 weeks 93.61. IF broken, the rise which started at the Fibonacci bottom will be ready to entertain spectators, targeting 94.24 & 95.05.

Support:
• 93.21: Fibonacci 61.8% for the micro term.
• 92.48: Fibonacci 61.8% for the short term.
• 91.82: important intraday bottom.

Resistance:
• 93.61: an intraday resistance which stopped the price several times.
• 94.24: Apr 7th high.
• 95.05: Aug 24th high.

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Forex Trading Analysis written by Munther Marji for ForexPros.

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