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Clarence, Forex Club updates on technical views,

US Dollar Index

The major trend of the US Dollar Index is still down. On Monday, the index went to a high of 77.06 before settling at 76.78, which is down by 0.20 compared to the previous week. The low of the week is 76.77. Immediate resistance to the Index is 78.96 (13-Week Moving Average Line), followed by 80.00.

Currently the RSI is pointing downward again at 26.28%, indicating that the index is continuing moving downward, resulting in a weakening US Dollar.

General Market Commentary (October 29, 2007) by MG Financial Group:

The Greenback remains under pressure as traders position ahead of this week’s closely anticipated FOMC monetary policy setting meeting. Fed funds futures are fully pricing in a 25-basis point rate cut to 4.50%, thereby dragging the Dollar to fresh record lows against the Euro at 1.4437.

Although the Fed is largely expected to ease by 25-bp, the dollar’s direction will likely be dictated by the accompanying FOMC policy statement and whether further easing can be anticipated. We look for the Fed to maintain a largely neutral stance in its policy statement, with an emphasis on the preemptive nature of the cut “to forestall some of the adverse effects on the broader economy”, as stated last month.

Several key pieces of US economic data are slated for release this week including Q3 GDP, Chicago PMI, September PCE, October manufacturing ISM, September durable goods orders, factory orders and the October labor report. Economic growth in the third quarter is estimated to slip to 3.0%, down from 3.8% previously. Meanwhile, October non-farm payrolls are expected to slip to 80.0k, versus 110.0k from September. The unemployment rate is seen unchanged at 4.7%. Nevertheless, garnering the lion’s share of market attention will be the Fed’s two-day policy setting meeting and accompanying statement scheduled for Wednesday at 2:15 PM.

The Euro rallied to a fresh high against the Dollar at 1.4437 and recovered further versus the Yen toward 165.47. Economic data released from the Eurozone overnight saw Germany’s preliminary CPI and HICP. The October CPI in the Eurozone’s largest economy edged up 0.2% m/m and 2.4% on an annualized basis, versus expectations for an increase of 0.1% m/m and 2.4% y/y. The October preliminary HICP was in line with forecasts, up 0.2% m/m and 2.7% y/y.

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. The week began as a bullish candle and broke to a high of 1.4438, indicating that the major “downward” retracement is not going to happen so soon, even with the Weekly Stochastic being over-bought. Immediate weekly support is at 1.4259, followed by 1.4084, and 1.4035 which is the upper band of the upward channel. Immediate weekly resistance is at 1.4438, which is the pair’s historically high. Weekly Stochastic is seen moving upward again at the 96% level, indicating that though the pair’s upside is limited, it is still attempting to move upward.

From the daily chart, on Monday, the price candle reached a high of 1.4438. Its immediate daily support is at 1.4322 (10-Day Moving Average Line), followed by 1.4280 (Upward Trend-line), 1.4154 and 1.4144 (40-Day Moving Average Line). The Default MACD has turned upward showing an up-trend, while the two pairs of Moving Average Lines are also indicating an up-trend. Daily Stochastic is seen moving upward at the 94% level, indicating a possible continuous 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 drifting upward towards 1.4450.

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. This week the price candle is bullish as the pair continues to move higher, indicating that the pair’s attempt to undergo a downward move is not going to take place so soon. Its immediate weekly resistance is at 2.0652, which is its historical high. Its immediate weekly support is at 2.0600 followed by 2.0398, 2.0351 (13-Week Moving Average Line) and 2.0140. Weekly Stochastic is seen moving upward again at the 93% level, indicating a limited upside.

From the daily chart, Monday’s upward move of more than 100 pips is a one with much momentum. Its immediate daily resistance is at 2.0652 while its immediate daily support is at 2.0546, followed by 2.0504 (10-Day Moving Average Line), 2.0480 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 89% level, indicating that the pair is still attempting 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 drifting upward towards its historical high of 2.0652.

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 momentum for the pair to move higher to around 2.0652. Hence we may go long for small profits of 30-50 pips.

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. This week’s price candle began as a bullish candle with an upward move of 50+ pips. 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 moving downward at the 13% level, indicating a possible downward move over the next few trading days.

From the daily chart, Monday’s bullish candle shows there is a firm daily support at 1.1607, while immediate daily resistance is at 1.1682 (10-Day Moving Average Line), followed by 1.1771 (40-Day Movig Average Line) and 1.1824. 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 19% level, indicating the pair is undergoing a downward move over the next few trading days.

From the hourly chart, the pair is seen moving downward but rebounded from a support at 1.1607.

The pair has lost its momentum to undergo its major “upward” retracement. Its immediate downward target is 1.1600, followed by 1.1550.

USD/JPY

From the weekly chart, this week began as a bullish candle with the pair moving upward 80+ pips. 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 115.21, 115.61 (Weekly 38.2% Fibo Level) and 116.41.Its immediate weekly support is at 114.15, followed by 113.00 (Weekly 50% Fibo Level) and 112.58. Weekly Stochastic is seen moving downward at 27% level.

From the daily chart, Monday’s upward move met a resistance at 114.85 (Daily 61.8% Fibo Level), with next daily resistance at 115.18 and 115.59 (40-Day Moving Average Line), while its daily support is at 113.65, followed by 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 50% level, indicating a possible rebound over the next few trading days before resuming its downward move.

From the hourly chart, the pair broke its intra-day resistance at 114.67 before retracing back downward below that level. It may make another attempt to go higher than 114.67 and remain above that level today.

The pair is seen regathering its upward momentum. It may move upward over the next few trading days before resuming its major downward move.

EUR/JPY

On the weekly chart, this week’s candle begins as a bullish candle. Its immediate weekly support is at 163.63, followed by 163.17 (13-Week Moving Average Line), followed by 161.84 (the lower band of the upward channel), 160.00 and 159.25 (52-Week Moving Average Line). Its immediate weekly resistance is at 168.48 (upper band of the upward channel). Weekly Stochastic is seen moving downward at 61% 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, Monday’s move broke above 164.55 (Daily 23.6% Fibo Level). Its immediate daily resistance is at 167.00, while its immediate daily support is at 165.16, followed by 164.28 (10-Day Moving Average Line), followed by 163.50 (40-Day Moving Average Line), 162.67 (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 92% level, indicating that the pair is riding on the strength of the Euro even its daily upside is limited.

On the hourly chart, the pair continues to move upward and managed to break its intra-day resistance at 165.16. If the pair is able to remain above 165.16, then it may move higher to 165.50 today.

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 day ahead!

Cheers,

Clarence

Admin of The Forex Club

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