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US Dollar Index

The major trend of the US Dollar Index is still down. On Tuesday, the index went to a high of 76.235 before settling at 76.025, which is down by 0.365 compared to the previous day. The low of the week is 75.970. Immediate resistance to the Index is 78.571 (13-Week Moving Average Line), followed by 80.00.

Currently the RSI is pointing downward at 23.77, indicating that the index is still continuing moving downward, resulting in a weakening US Dollar.

General Market Commentary (November 6, 2007) by MG Financial Group:

The beleaguered dollar continues to plumb new lows across the board, hitting 2.0904 against the sterling and 1.4570 versus the euro. Sentiment for the greenback remains heavily bearish despite recent US economic not pointing towards the worst-case scenario of an imminent recession.

The latest string of upbeat reports included Q3 GDP, a robust labor market as evident in the October non-farm payrolls and yesterday’s stronger than expected non-manufacturing ISM - which suggests another 25-basis point Fed rate cut may not be forthcoming. Deterioration in the housing market and credit concerns continue to be the Achilles heel for the US currency as investor nervousness over banks’ balance sheets remain heightened. Uncertainty about the extent of further write-offs stemming from the subprime debacle will likely plague the greenback over the quarter.

The economic calendar for the Wednesday session will see Q3 productivity, labor costs, September wholesale inventories, and September consumer credit. Consensus estimates for Q3 productivity are calling for an increase to 3.0% versus 2.6% in the previous quarter. Labor costs in Q3 are estimated to slip to 1.0%, down from 1.4% from Q2. Meanwhile, consumer credit is estimated to decline to $8.3 billion in September, down from $12.2 billion a month earlier.

The euro reached another all-time high against the dollar at 1.4570 and edged closer to the 167-level versus the yen. Data releases from the Eurozone overnight saw October services PMI, which exceeded estimates to 55.8 and September producer prices, which were slightly higher than expected at 2.7% y/y and 0.4% m/m. Retail sales improved in September, albeit short of forecasts, at 0.3% versus 0.1% a month earlier and 1.6% compared with 1.0% in the previous year. However, Germany’s industrial orders in September tumbled by 2.5%, compared with a 1.2% increase from August.

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. This week, the pair continues to be bullish as it broke higher to 1.4570, which is its historical high. Immediate weekly support is at 1.4259, followed by 1.4084, and 1.4048 which is the upper band of the upward channel. Immediate weekly resistance is at 1.4600, which is the pair’s next psychological level. Weekly Stochastic is seen moving upward at the 96% level, indicating that the pair is at an overly-bought level as it continues to move upward.

From the daily chart, on Tuesday, the price candle turns bullish again, indicating a regathering of upward momentum, as the pair reaches another historical high of 1.4570. Its immediate daily support is at 1.4453 (10-Day Moving Average Line), followed by 1.4415, 1.4392 (Upward Trend-line) and 1.4245 (40-Day Moving Average Line). The Default MACD is showing an up-trend, while the two pairs of Moving Average Lines are also indicating an up-trend. Daily Stochastic is seen moving sideway at the 80% level, indicating a possible pull-back this coming week. Only a break below 1.4392 will indicate a possible major downward retracement move.

From the hourly chart, the pair’s immediate support is at 1.4467. Any break below this level may be the first sign of weakness.

The pair is seen to be gathering its upward momentum again. Patience is needed here as we wait for any confirmation of weaknesses when the price retraces below 1.4392. The pair is definitely at a super over-bought level. However, if the pair continues to move upward, we may target 30-50 pips of profit. Its immediate price target is now 1.4600, and ultimately 1.5000.

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’s bearishness may turned bullish as the price continues to move upward, establishing a new historical high of 2.0905. Its immediate weekly resistance is at 2.0900, which is a key psychological level. Its immediate weekly support is at 2.0570 followed by 2.0398. Weekly Stochastic is seen moving upward at the 94% level, indicating that the pair is at an overly-bought level as it continues to move upward.

From the daily chart, Tuesday’s price candle turned bullish after the pair recovers its Monday’s loss, and establishes a new historical high at 2.0905. Its immediate daily resistance is at 2.0900 while its immediate daily support is at 2.0770, followed by 2.0750 (10-Day Moving Average Line) and 2.0678. The pair’s short-term moving average lines (10 and 40-Day) are still indicating an uptrend. Both MACDs are also indicating an uptrend. Daily Stochastic is seen moving a little downward at the 81% level. Currently, the pair is still bullish. However, any attempt for the price to retrace below 2.0678 may be a first sign of weakness.

From the hourly chart, the pair’s immediate support is at 2.0848. Any break below this level may be a first sign of intra-day weakness, with next support at 2.0769.

The pair is seen to be gathering its upward momentum again. Patience is also needed here as we wait for any confirmation of weakness when the price retraces below 2.0678. The pair is definitely at a super over-bought level. However, if the pair continues to move upward, we may target 30-50 pips of profit. Its immediate price target is now 2.1000.

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 is bearish as the pair continues to break lower to 1.1448. Its immediate weekly resistance is at 1.1502, followed by 1.1642, 1.1770 (Weekly 23.6% Fibo Level), 1.1848, 1.1904 and 1.1985, while its immediate weekly support is at 1.13234. Weekly Stochastic is seen moving downward at the 10% level, indicating an overly-sold level for the pair.

From the daily chart, Tuesday’s bearish candle found a support at 1.1422. The pair’s immediate daily resistance is at 1.1562 (10-Day Moving Average Line), followed by 1.1617, and 1.1701 (40-Day Movig Average Line). The default MACD is showing a downtrend while the short-term moving average lines (10-Day and 40-Day Moving Average Lines) are also indicating that the pair is on its major “down” trend. The Daily Stochastic is seen moving sideway at the 19% level, indicating that the pair’s persist weakness.

From the hourly chart, the pair needs to break above 1.1562 in order to regather its upward momentum.

Still no sign of any price recovery ahead. Watch for the price to recover above the 1.1617 level for a bullish recovery, otherwise short the pair for small profits of 30-50 pips on intra-day rebounds.

USD/JPY

From the weekly chart, this week the pair’s bullish candle met its immediate resistance at 115.21. This may be its another attempt to crawl back to its upward channel. However, both the Long MACD and the Moving Average Lines are still indicating a down-trend. Its immediate weekly resistance is at 115.21, followed by 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 the 29% level.

From the daily chart, Tuesday’s upward move met firm resistance at 114.88 (Daily 61.8% Fibo Level). Next daily resistance is at 115.18, followed by 116.57 (Daily 50% Fibo Level) and 117.38. 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. Daily Stochastic is seen moving downward at the 23% level. Need to wait for any price action to confirm today’s move.

From the hourly chart, the pair’s immediate resistance is at 114.67, with support at 114.36. Any break-up out of these two levels are trade opportunities for us.

The pair is seen to be indecisive this week. Let the price action indicates our trading plan for this pair.

EUR/JPY

On the weekly chart, this week’s candle is bullish. Its immediate weekly support is at 163.63, followed by 162.10 (the lower band of the upward channel), 160.00 and 159.57 (52-Week Moving Average Line). Its immediate weekly resistance is at 168.54 (upper band of the upward channel). Its Long MACD is showing a down-trend. Weekly Stochastic is seen crossing upward at the 68% level, indicating that the pair is once again riding on the strength of the Euro.

On the daily chart, Tuesday’s bullish move met firm resistance at 167.00. Its immediate daily support is at 165.16, followed by 164.75 (Daily 23.6% Fibo Level), 164.28 (40-Day Moving Average Line), 163.17 (89-Day Moving Average Line) and 162.05 (Daily 38.2% Fibo Level). Both MACDs are indicating an uptrend. Daily Stochastic is seen crossing upward at the 60% level, indicating that the pair may continue its upward move over the next few trading days.

On the hourly chart, the pair may pull-back down to 166.45, so as to regather its upward momentum.

We are looking to go long on this pair based possible TNT buy signals, as it continues to ride on the strength of the Euro.

TNT students, please use the updated TNT charting templates that was sent to you on November 4. 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

Life is for Living and NOT Working.

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