TNT Daily Forecast – 16 October 07

I’ve gotten permission from Clarence, admin of The Forex Club on Yahoo to reprint his daily insights with his TNT system. Check it out : )

US Dollar Index

The major trend of the US Dollar Index is still down. On Monday, the index went to a high of 78.130 before settling at 78.985, which is down by 0.175 compared to Friday. The low of the week is 77.860. Immediate resistance to the Index is 79.553 (13-Week Moving Average Line), followed by 80.00.

Currently the RSI is pointing downward at 30.92%, indicating that the index is trending downward (secondary downward retracement) which is a weakening US Dollar. We expecting the RSI to rise to the high of 43% before resuming its major downtrend.

General Market Commentary (October 15, 2007) by CMS Forex:

The Dollar was lower against the Euro and Yen on Monday but reversed overnight losses versus the Dollar-block currencies as US stocks fell. The Yen was initially lower as the news that the US government would work with big banks to help clean up credit-market problems increased risk appetite. However, falling stocks in the US increased risk aversion and the high yielding currencies reversed earlier gains against the Yen. Sterling rose on a stronger-than- expected UK house price gain.

The EUR/USD rose ahead of tomorrow’s European inflation reports on speculation quickening inflation will prompt the European Central Bank to keep raising interest rates. The pair’s short-term and long-term trends are still up. There is resistance at the 1.43-handle. If this is broken, the pair will possibly test the 1.4570 area, which would be the pre-euro highs for the German mark. We expect volatility in the pair this week as the FX market awaits the October 19 G-7 meeting. There are supports in the 1.40 and 1.38 areas.

International Monetary Fund Managing Director Rodrigo de Rato said the Dollar has more room to fall over the next several years. Over the medium term “we still see room for further depreciation, ” Mr. de Rato said. As for the Euro, he said, it is “very near” its equilibrium value. His comments seem to imply the Asian currencies may appreciate.

The New York Fed’s manufacturing index rose to a stronger-than- expected 28.8 in October, the highest since July 2004, from 14.7 in September. The number indicates a continued expansion in the New York manufacturing sector.

UK home prices rose a stronger-than- expected 2.7% in October driven by a surge of higher value properties ahead of new regulations. Average asking prices in London increased a record 5.0% m/m in October after falling 2.5% m/m in September, according to Rightmove’s monthly survey. The surge in London price helped push the countrywide increase to 2.7% m/m, reversing September’s 2.6% m/m decline.

European Central Bank President Jean-Claude Trichet said the ECB has not changed its economic growth forecasts.

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 major downward retracement has not materialized on Monday. However, it is due to materialize sometime this week. The pair remain above the weekly support of 1.4084, with next support at 1.4011 which is the upper band of the upward channel. Immediate weekly resistance is at 1.4300, which is the pair’s historically high. Weekly Stochastic is seen crossing downward at the 80% level, indicating that the pair has limited upside and is gathering momentum for a downward move.

From the daily chart, the pair remains supported at 1.4154, with next support at 1.4065, 1.3972 and 1.3853. Immediate daily resistance is at 1.4300. The Default MACD is showing a down-trend while the two pairs of Moving Average Lines are still indicating an up-trend. Immediate daily resistance is at 1.4200, followed by 1.4300. Daily Stochastic is seen going to cross downward at the 71% level, indicating a possible downward move over the next few trading days. This week, we are expecting the pair to make another attempt for a major “downward” retracement.

From the hourly chart, the pair is seen forming a double top at 1.4240.

We are still bearish towards the pair, waiting for the pair to resume its major “downward” retracement.

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. The pair broke its weekly resistance at 2.0398, which is now its immediate support, with next weekly support at 2.0140. Weekly Stochastic is seen at the 84% level, indicating a limited upside for this pair.

From the daily chart, the pair is seen approaching the daily resistance level at 2.0480. Immediate daily support at the 2.0360 level, followed by 2.0276 (40-Day Moving Average Line). The pair’s short-term moving average lines (10 and 40-Day) are still indicating an uptrend. However, the Default MACD is beginning to indicate a downtrend. Daily Stochastic is seen moving upward at the 53% level, indicating the pair’s secondary upward retracement.

From the hourly chart, the pair is seen reaching the R2 of the day at 2.0434, with next resistance at 2.0480. Immediate intra-day support is at 2.0360, followed by 2.0305 (Hourly 23.6% Fibo Level) and 2.0286.

We are still bearish towards the pair, waiting to short the pair when it resumes its major “downward” retracement.

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. However, this week’s bear candle indicates that the pair is still undergoing its secondary downward retracement. The pair met firm resistance at 1.1848. Immediate weekly support is at 1.1770 (Weekly 23.6% Fibo Level), followed by 1.1642. Weekly Stochastic has crossed upward at the 42% level, indicating that the pair is still gathering its momentum for its major “upward” retracement.

From the daily chart, the pair met firm resistance at 1.1838 (40-Day Moving Average Line), with next daily resistance at 1.1895 (Daily 23.6% Fibo Level) and 1.1937 (89-Day Moving Average Line). Immediate daily support is at 1.1628. Both MACDs are showing an up-trend, 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 56% level, indicating the pair may need to do a pullback before resuming its major “upward” retracement.

From the hourly chart, the pair is broke the intra-day support at 1.1800 but rebounded above that level.

We are waiting for the pair to resume its major “upward” retracement and go long on the pair.

USD/JPY

From the weekly chart, the pair is continuing its attempt to crawl back to its upward channel. However, both the Long MACD and the Moving Average Lines are still indicating a down-trend. This week the pair is seen moving downward and is caught between its 13-Week and 26-Week Moving Average Lines. Immediate weekly resistance is at 117.86 (26-Week Moving Average Line), followed by 118.97 (Weekly 23.6% Fibo Level). Immediate weekly support is at 117.00 (13-Week Moving Average Line). Weekly Stochastic is continuing its upward move at 88% level.

From the daily chart, the pair is seen supported at 117.38 level, followed by 116.57 (Daily Fibo Level) and 116.35 (40-Day Moving Average Line). Immediate resistance is at 117.88 (144-Day Moving Average Line), followed by 118.40 (Daily 38.2% Fibo Level). Its short-term (10-Day and 40-Day) moving average lines have crossed upward indicating its upward move. Both MACDs are also indicating an uptrend. Daily Stochastic is seen crossing downard again at the 69% level.

From the hourly chart, the pair failed to remain above its support at 117.53 which indicates a temporary loss of upward momentum.

We are still bullish towards this pair and are watching to go long on pull-back.

EUR/JPY

On the weekly chart, this week, the pair met firm resistance at the upper band of its upward channel (i.e. 167.89). Its immediate weekly support is at 163.63, followed by 163.11 (13-Week Moving Average Line) and 161.29 (Lower band of the upward channel). Weekly Stochastic is showing a limited upside at 93% level. Watch for a major downward retracement just like EUR/USD.

On the daily chart, the pair met firm resistance at 167.00, with next daily resistance at 1.68.85. Its immediate support is at 165.80 (10-Day Moving Average Line), followed by 165.16, 164.70 (Daily 23.6% Fibo Level) and 162.05 (Daily 32.8% Fibo Level). Both MACDs are still indicating an upward trend. Daily Stochastic is seen trending sideway at the 70% level.

On the hourly chart, the pair met firm resistance at 167.75 and then dived down to 166.45 level.

We remain cautious towards this pair.
TNT students, please use the updated TNT charting templates that was sent to you on October 14. 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