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US Dollar Index

The major trend of the US Dollar Index is still down. Last Friday, the index went to a high of 77.21 before settling at 76.98, which is down by 0.25 compared to Thursday. The low of the week is 76.94. Immediate resistance to the Index is 79.21 (13-Week Moving Average Line), followed by 80.00.

Currently the RSI is pointing downward again at 26.91%, indicating that the index has lost its upward momentum for its major “upward” retracement, resulting in a weakening US Dollar. Looks like the RSI has no strength to go up to the 43% level.

General Market Commentary (October 26, 2007) by MG Financial Group:

The Dollar extended its loss versus the Euro and Sterling on expectations that the Fed may cut interest rates again next week. The Dollar Index slumped to a fresh all-time low at 77.035. The Euro approached 1.44 versus the Dollar, while the Sterling rose to as high as 2.0571.

This week’s economic data, including housing sales, durable goods orders, weekly jobless claims and today’s consumer sentiment index, all showed signs of economic growth slow down. University of Michigan consumer sentiment index fell from 83.4 to 80.9 in October, below the estimate of 82.

It is widely expected that the Fed will lower rates by a quarter-percentage point to 4.00%. Under the pressure of housing slump and rising credit costs, the nation’s economic growth may slow down in the future. The overall sentiment on the Dollar is bearish.

Eurogroup Chairman Junker said in a newspaper interview published today that last week’s G7 statement limited to the yuan showed they did not reach agreement on the Yen and Dollar foreign exchange range. He added that he preferred a stronger Euro and the currency’s current trading level was not yet an alarm-causing level. The Euro may rise further to reach next target area at 1.4420-50 versus the Dollar.

EUR/USD

From the weekly chart, the pair is on a major “upward” move, as indicated by the Long MACD and the Moving Average Lines. Last week’s price candle turned bullish on Friday after breaking to a high of 1.4393, indicating that the major “downward” retracement is not going to happen so soon, even with the Weekly Stochastic over-bought. Immediate weekly support is at 1.4084, with next support at 1.4022 which is the upper band of the upward channel. Immediate weekly resistance is at 1.4393, which is the pair’s historically high. Weekly Stochastic is seen crossing upward again at the 88% level, indicating that though the pair’s upside is limited, it is still attempting to move upward.

From the daily chart, last Friday the price candle closed at 1.4390 which is only 3 pips below the week’s and day’s high. Its immediate daily support is at 1.4276 (10-Day Moving Average Line), followed by 1.4154 and 1.4116 (40-Day Moving Average Line). The Default MACD is showing a down-trend that is slowly moving upward, while the two pairs of Moving Average Lines are still indicating an up-trend. Daily Stochastic is seen crossing upward at the 79% level, indicating a possible upward move over the next few trading days before making another attempt to undergo its major “downward” trend.

From the hourly chart, the pair is seen making a strong attempt to go higher. Immediate intra-day target is seen as 1.4400.

We are still bearish towards the pair, as the pair’s upside is limited. Once the pair shows a strong signal of undergoing its major “downward” retracement, we will look to short the pair. However, if the pair continue to break higher, we may go long for small profits of 30-50 pips.

GBP/USD

From the weekly chart, the pair is on a major “upward” move, as indicated by the Long MACD and the Moving Average Lines. Last week the price candle broke higher to 2.0571, indicating that the pair’s attempt to undergo a downward move is losing its momentum. Its immediate weekly resistance is at 2.0600, followed by 2.0652, which is its historical high. Its immediate weekly support is at 2.0398, followed by 2.0303 (13-Week Moving Average Line) and 2.0140. Weekly Stochastic is seen moving sideway at the 87% level, indicating a limited upside.

From the daily chart, Friday’s attempt to move higher prevented the pair from undergoing a downward move. Its immediate daily resistance is at 2.0546 while its immediate daily support is at 2.0480, followed by 2.0462 (10-Day Moving Average Line) and 2.0360. The pair’s short-term moving average lines (10 and 40-Day) are still indicating an uptrend. Daily Stochastic is seen moving upward at the 83% level, indicating that the pair may still want to push higher before attempting to undergo its major “downward” retracement. We are still expecting the pair to make another attempt to undergo major downward retracement as its upside is limited.

From the hourly chart, the pair is seen breaking the resistance at 2.0545 and then retraced back to below that price level.

We are still bearish towards the pair. Once the pair shows sign of undergoing its major “downward” retracement, we will go short on the pair. However, there is still some momentum for the pair to move higher to around 2.0600.

USD/CHF

From the weekly chart, the pair is on a major “downward” move, as indicated by the Long MACD and the Moving Average Lines. Last week’s price candle continues to maintain its bullishness after Friday’s fall. Its immediate weekly resistance is at 1.1642, followed by 1.1772 (Weekly 23.6% Fibo Level), 1.1848, 1.1904 and 1.1985, while its immediate weekly support is at 1.1502. Weekly Stochastic is seen crossing downward at the 30% level, indicating a possible downward move over the next few trading days.

From the daily chart, Friday’s candle continues to be bearish after the dive on Tuesday, Wednesday and Thursday, which seems to be a resumption of the major “downward” trend. Immediate daily resistance is at 1.1706 (10-Day Moving Average Line), followed by 1.1786 (40-Day Movig Average Line) and 1.1824, while its immediate daily support is at 1.1607. The default MACD is showing a downtrend while the short-term moving average lines (10-Day and 40-Day Moving Average Lines) are still indicating that the pair is on its major “down” trend. The Daily Stochastic is seen moving downward at the 42% level, indicating the pair will undergoing a downward move over the next few trading days.

From the hourly chart, the pair is seen moving downward continuously without any retracement since last Thursday. Expect an upward intra-day retracement before the pair resumes its downward move.

The pair has lost its momentum to undergo its major “upward” retracement. Its immediate downward target is 1.1600.

USD/JPY

From the weekly chart, last week the candle continues to maintain its bullishness. This may be its another attempt to crawl back to its upward channel. Both the Long MACD and the Moving Average Lines are still indicating a down-trend. Its immediate weekly resistance is at 114.15, followed by 115.21, 115.61 (Weekly 38.2% Fibo Level) and 116.41.Its immediate weekly support is at 113.00 (Weekly 50% Fibo Level) and 112.58. Weekly Stochastic is seen moving downward at 49% level.

From the daily chart, last Friday the pair continues to drift between 114.85 (Daily 61.8% Fibo Level) and 113.65. Its next daily resistance is at 115.18, while its next daily support is at 112.66. Its short-term (10-Day and 40-Day) moving average lines have crossed downward again indicating a downward move. Default MACD is also indicating a downtrend. However, Daily Stochastic is seen moving upward at 42% level, indicating a possible rebound over the next few trading days before resuming its downward move.

From the hourly chart, last Friday’s the price was ranging between the intra-day resistance at 114.36 and the intra-day support at 114.06 in a directionless manner.

The pair is seen to be losing its upward momentum. It may move downward over the next few trading days.

EUR/JPY

On the weekly chart, last week’s candle continues to maintain its bullishness. Its immediate weekly support is at 162.79 (13-Week Moving Average Line), followed by 161.89 (the lower band of the upward channel), 160.00 and 159.01 (52-Week Moving Average Line). Its immediate weekly resistance is at 163.63, followed by 168.11 (upper band of the upward channel). Weekly Stochastic is seen moving downward at 72% level. However, the pair may make another attempt to move upward over the next few trading days, riding on the strength of the Euro.

On the daily chart, last Friday, the pair is moving upward. Its immediate daily resistance 164.55 (Daily 23.6% Fibo Level), followed by 165.16 and 167.00, while its immediate daily support is at 163.93 (10-Day Moving Average Line), followed by 163.34 (40-Day Moving Average Line), 162.56 (89-Day Moving Average Line) and 162.05 (Daily 38.2% Fibo Level). Default MACD is indicating a downtrend while the Long MACD is still indicating an up-trend. Daily Stochastic is seen moving upward at the 67% level, indicating a possible rebound over the next few trading days before resuming its downward move.

On the hourly chart, the pair continues to move upward but met an intra-day resistance at 164.35.

The pair may rebound over the next few trading days, riding on the strength of the Euro before resuming its downward move.

TNT students, please use the updated TNT charting templates that was sent to you on October 28. Any resistance or support levels not found in the charts, please manually update them yourself as we will be sending you the next updated charting templates this coming Sunday.
The above analysis can also be used by our non-TNT students as a guide to their own trading. We welcome feedback from our non-TNT students regarding the effectiveness of this Daily TNT Market Analysis for your trading.

Have a great trading week ahead!

Cheers,

Clarence

Admin of The Forex Club

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