Action Insight | Written by ActionForex.com | Nov 29 07 14:15 GMT |
Forex Mid-Day Technical Report Dollar Regains Strength, Steady after GDP Revision

Dollar regains strength against European majors today as correction continues. Q3 GDP growth was revised up to 4.9% annualized rate, fastest growth in four years and slightly above expectation of 4.8%. The growth rate was also much stronger than Q2’s 3.9%. However, the data did little to change the view of steep slowdown in Q4 due to housing and mortgage markets problems. Jobless claims surged sharply higher to 352k, the first above 350k reading since Fed and signal a more sever deterioration in the job market. New home sales will be released later in the morning. Recent Fedspeaks will also continue with Mishkin and Bernanke featured today.

Sterling gave back yesterday’s gain after dovish comments from BoE members on the testimony before Parliamentary Treasury Select Committee. Blanchflower also made clear his intent to vote for a decrease again in December, though the overall vote will still be tight. Sterling is also weighed down by steeper than expected slow down in how price growth which saw Nationwide House price Index fell by the most since Jun 95, -0.8% mom in Nov, dragging yoy rate to 6.9% versus expectation of 8.4%. Germany’s job market continues to show surprised improvement. Unemployment rate dropped further from 8.7% to 8.6% in Nov, as the number of jobless fell by a further -53k. However, Eurozone Retail PMI fell for the third consecutive month to 45.9 in Nov, suggesting the majority of purchasing managers are feeling pessimistic. Euro heads to retest yesterday’s low. EUR/USD

Daily Pivots: (S1) 1.4749; (P) 1.4804; (R1) 1.4895; «www.actionforex.com»

EUR/USD’s recovery was limited at 1.4859 and eases back today. At this point, correction from 1.4966 is still expected to extend lower as long as 1.4859 resistance holds, probably towards 1.4519 clusters support. Above 1.4859 will indicate that fall from 1.4966 has possibly completed and bring retest of 1.5 cluster resistance.

As discussed before, while rise from 1.4014 is completed, it’s early to confirm that rise from 1.3360 has completed too. Focus is now on 1.4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490). Decisive break of this support zone will add much credence to the case that rally from 1.3360 has completed too after failing 1.5 key medium resistance and bring deeper correction to 1.4014/4281 support zone before resuming the long term up trend. But strong rebound above this level will suggest another rise should be seen before making a medium term top.

In the bigger picture, regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and is now close to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance. Upside could be limited by this resistance initially on overbought condition. Sustained trading above this key resistance is needed to confirm medium term rally is still underway to next projection target of 100% projection at 1.7048. On the downside, firm break of 1.3851 resistance turned support is needed to be the first signal that this up trend from 1.1639 has completed. Otherwise, long term outlook remains bullish.

GBP/USD

Daily Pivots: (S1) 2.0657; (P) 2.0744; (R1) 2.0907; «www.actionforex.com»

Cable’s rebound was limited by at 2.0380, below mentioned 2.0845 cluster resistance and eased back to 2.06 level today. Short term outlook remains neutral at this moment. With 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852) remains intact, the original view still holds. That is, rise from 1.9652 has completed after touching medium term rising channel resistance. Fall from 2.1161 is expected to extend further to retest medium term rising channel support (now at 2.0040) after finishing the current corrective rebound from 2.0353. Below 2.0579 support will bring retest of 2.0353 low first. However, sustained break of 2.0845 cluster resistance will indicate that fall from 2.1161 has completed and will bring retest of this high.

In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.

USD/CHF

Daily Pivots: (S1) 1.1032; (P) 1.1114; (R1) 1.1188; «www.actionforex.com».

USD/CHF’s rebound from 1.0890 resumes today and reaches as high as 1.1199 so far. At this point, further rally is still in favor as long as 1.1097 support holds. However, upside is still expected to be limited by 1.1298 resistance and bring resumption of the fall from 1.2467. on the downside, below 1.1071 will flip intraday bias back to the downside, indicating recovery is completed and bring retest of 1.0890 low.

In the bigger picture, the current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend resumed. Sustained trading below 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103) encourages decline to next medium term target of 161.8% projection at 1.0260. On the upside, however, break of 1.1298 resistance will be bring stronger rebound towards 38.2% retracemment of 1.2467 to 1.8090 at 1.1492 first.

USD/JPY

Daily Pivots: (S1) 108.71; (P) 109.59; (R1) 110.92; «www.actionforex.com».

USD/JPY is bounded in tight range after rebound from 107.21 reached as high as 110.47. At this point, intraday bias remains on the upside as long as 109.13 minor support holds and further rise could still be seen. But still, upside is expected to be limited by 111.76 resistance and bring resumption of fall from 117.94. On the downside, below 109.13 will indicate rebound has completed and bring retest of 107.21 low.

In the bigger picture, sharp decline from 124.13 remains in force and is expected to extend at least further to 100% projection of 124.13 to 111.59 from 117.94 at 105.40 and will likely bring retest key long term support zone of 101.22/65. On the upside, above 111.76 resistance will suggest that fall from 117.94 has completed and bring lengthier consolidation. But a break of 115.91 resistance is needed to signal down trend from 124.13 has completed too. Otherwise, medium term outlook remains bearish.

EUR/JPY

Daily Pivots: (S1) 161.14; (P) 162.36; (R1) 164.50; «www.actionforex.com»

EUR/JPY’s rise from 159.36 reaches as high as 163.62 earlier today. But subsequent retreat and touching of 161.83 minor support turned intraday outlook neutral for the moment. Outlook remains unchanged. With EUR/JPY still kept below 164.00/26 cluster resistance and struggling at 55 days EMA (now at 162.80), the case that rise from 149.27 has already completed at 167.72 is still in favor. That is, price actions from 168.93 is developing into larger scale consolidation and the last falling leg is in progress, with price actions from 158.67 as interim consolidation. Below 161.83 will suggest that EUR/JPY has failed the 164.00/26 cluster resistance again and will encourage a retest of 159.36 support first.

Also, note that choppy trading could still continue until a break of the established range of 158.67 and 164.30. On the downside, break of 158.67 will confirm fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. On the upside, sustained break of 164.00/26 cluster resistance will flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27 and will bring retest of this high and then 168.93 key resistance.

In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed.

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Thu, 29 Nov 2007 10:28:00 GMT from The Australian

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Thu, 29 Nov 2007 10:16:00 GMT from Reuters UK

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Thu, 29 Nov 2007 10:02:00 GMT from Yahoo! Canada

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Industrial prod’n M/M Oct 1.60% 1.80% -1.40%
23:50 JPY Japan Industrial prod’n Y/Y Oct 4.70% 4.00% 0.80%
07:00 GBP U.K. Nationwide hse price M/M Nov -0.80% 0.10% 1.10%
07:00 GBP U.K. Nationwide hse price Y/Y Nov 6.90% 8.40% 9.70%
09:00 EUR Germany Unemployment rate Nov 8.60% 8.70% 8.70%
09:00 EUR Germany Unemployment change Nov -53K -30.0K -40.0K
09:45 GBP MPC Treasury Committee Hearings
11:00 GBP U.K. CBI distribution trade Nov 13 8 10
13:30 CAD Canada Current account Q3 1.0B 3.5B 8.36B
13:30 CAD Canada PPI M/M Oct -1.10% -0.50% -0.90%
13:30 CAD Canada PPI Y/Y Oct -1.00% N/A 0.10%
13:30 USD U.S. PCE core Q/Q Q3 1.80% 1.80% 1.80%
13:30 USD U.S. GDP deflator Q3 0.90% 0.80% 0.70%
13:30 USD U.S. GDP annualised Q3 4.90% 4.80% 3.90%
13:30 USD U.S. Personal consumption Q3 2.70% 2.80% 3.00%
13:30 USD U.S. Jobless claims Nov 352K 332.0K 330K
15:00 USD U.S. New home sales Oct 0.75M 0.77M
15:00 USD U.S. New homes change Oct -2.60% 4.80%

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The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of investors intending to purchase real estate in the EU are utilizing forward agreements to hedge their exposure to the Euro, which has risen 10% against the Pound since the beginning of 2008. Evidently, prospective home buyers are hoping that the Euro returns to 2007 levels, which would significantly lower the cost of buying property there. However, if the Euro continues to appreciate, such investors could end up losing more than they bargained for. Homes Worldwide reports:

Even the movement in the markets over a couple of days can make the difference between owning a property and no longer being able to afford it.

Read More:

The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of investors intending to purchase real estate in the EU are utilizing forward agreements to hedge their exposure to the Euro, which has risen 10% against the Pound since the beginning of 2008. Evidently, prospective home buyers are hoping that the Euro returns to 2007 levels, which would significantly lower the cost of buying property there. However, if the Euro continues to appreciate, such investors could end up losing more than they bargained for. Homes Worldwide reports:

Even the movement in the markets over a couple of days can make the difference between owning a property and no longer being able to afford it.

Read More:

The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of investors intending to purchase real estate in the EU are utilizing forward agreements to hedge their exposure to the Euro, which has risen 10% against the Pound since the beginning of 2008. Evidently, prospective home buyers are hoping that the Euro returns to 2007 levels, which would significantly lower the cost of buying property there. However, if the Euro continues to appreciate, such investors could end up losing more than they bargained for. Homes Worldwide reports:

Even the movement in the markets over a couple of days can make the difference between owning a property and no longer being able to afford it.

Read More:

Action Insight | Written by ActionForex.com | Oct 26 07 06:04 GMT |
Forex Daily Technical Report Euro Pressing Record High, Aussie Surges

The Aussie steals the show today, rising to new 23 year high of 0.9117 against dollar on expectation of another rate hike from RBA on Nov 6-7. Aussie is additionally supported by strength in gold price that surged to new 28 years high of $772.90 an ounce. On the other hand, even though crude oil rose to record above $91 a barrel, Canadian dollar is still limited by yesterday’s 33 year high of 0.9612 against dollar on deeply overbought condition and loss of momentum.

Released overnight, Japan National CPI remain in negative territory at -0.2% yoy in Sep. Core inflation, excluding food prices, came in at -0.1% yoy, negative for the eighth consecutive month. Inflation pressures remain subdued and will continue to delay BoJ’s normalization of rates. Industrial production dropped -1.4% mom, +0.8% yoy in Sep, missing expectation. The Japanese yen is mildly lower in crosses but the current recovery in yen crosses is still treated as consolidation to the fall of a larger degree only.

EUR/USD continues to press record high of 1.4348 but lacks the decisive momentum to take it out yet. Just released, German Gfk consumer confidence tumbled from 6.8 to 4.9, much worse than expectation of 6.5. Eurozone M3 money supply growth is expected to slow fro 11.6% yoy to 11.4% yoy in Sep on higher interest rates but it’s still extremely fast growth. Swiss combined PPI is expected to rise 0.3% mom, 2.9% yoy in Sep comparing to prior 0.3% mom, 2.7% yoy. EUR/USD

Daily Pivots: (S1) 1.4266; (P) 1.4305; (R1) 1.4362; «www.actionforex.com»

EUR/USD continues to press record high of 1.4348 today. At this point, intraday bias remains on the upside as long as 1.4245 minor support holds. Decisive break of 1.4348 high will indicate recent rally has resumed for next upside target of 1.4535 resistance zone (200% projection of 1.3262 to 1.3851 from 1.3360 at 1.4538). But upside could be limited there initially on loss of momentum.

On the downside, below 1.4245 will turn intraday outlook neutral first. Also, note that a drop below 1.4124 support will revive that case that a short term top is in place with bearish divergence condition in 4 hours MACD and RSI. In that case, deeper correction should be seen to 1.4014 support and below.

In the bigger picture, with medium term rising channel (support at 1.3575) remains intact, up trend from 1.1639 remains in force. Also, regardless of internal structure, such rise is treated as resumption of the long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and is expected to extend to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance. A break below the mentioned medium term trend line is needed to be the first alert to indicate that such rally from 1.1639 has completed. Otherwise, medium term outlook remains bullish.

GBP/USD

Daily Pivots: (S1) 2.0457; (P) 2.0504; (R1) 2.0558; «www.actionforex.com»

Cable turns into sideway consolidation after a brief break of 2.0538 resistance. Nevertheless, further rise is still expected as long as 2.0424 support holds. Rally from 1.9879 is treated as resumed for next upside target of 100% projection of 1.9652 to 2.0365 from 1.9879 at 2.0592. However, below 2.0424 will revive the case that a short term top is in place on bearish divergence condition in 4 hours MACD and RSI and will put short term channel support (now at 2.0166) into focus.

In the bigger picture, cable has made an important medium term at 2.0652 after failing 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 with bearish divergence condition in daily and weekly MACD. Subsequent three waves fall from 2.0652 to 1.9652 is either a correction that has completed, or just one leg of sideway consolidation. Decisive break of 2.0677 fibo resistance is needed to confirm that medium term up trend from 1.7047 has resumed. Otherwise, another fall is still in favor. On the downside, break of the short term rising channel will confirm corrective rebound from 1.9652 has completed at 2.0528 and bring deeper decline to 1.9652 low first.

USD/CHF

Daily Pivots: (S1) 1.1616; (P) 1.1675; (R1) 1.1716; «www.actionforex.com».

USD/CHF turns sideway after reaching 1.1633. At this point, further decline is still expected as long as 1.1700 support turned resistance holds. Retest of 1.1597 should be seen and break will confirm recent fall has resumed for next downside target of 100% projection of 1.2467 to 1.1816 from 1.2214 at 1.1590 first. Above 1.1700 will turn short term outlook neutral again.

In the bigger picture, USD/CHF is still staying well below 55 weeks EMA. A series of lower highs were made since 1.3283. Prior break of lower trend line support (1.1919, 1.1878, 1.1816) confirmed medium term bearishness. The current fall from 1.2467 is tentatively treated as resumption of medium term down trend that started at 1.3283 which could extend further to retest 1.1288 (04 low). However, above 1.1891 resistance will warn that the whole fall from 1.2467 has completed and put focus to short term falling trend line (now at 1.1947).

USD/JPY

Daily Pivots: (S1) 113.76; (P) 114.17; (R1) 114.56; «www.actionforex.com».

USD/JPY continues to engage in choppy trading in tight range today. As discussed before, rebound from 113.23 could have completed at 115.03 after touching 38.2% retracement from 117.93 to 113.23. At this point, further downside is still in favor to retest 113.23 low and break break will confirm fall from 117.93 has resumed for 111.59 low. On the upside, above 115.03 will indicate rebound is still in progress but still upside is expected to be limited below 116.16 resistance and bring another fall.

In the bigger picture, note that prior break of long term rising trend line (101.65, 108.99) indicates the the whole up trend from 101.65 has completed at 124.13 already, with bearish divergence condition in weekly MACD and RSI. Subsequent sharp fall from 124.13 has made a short term low at 111.59 and rebound from there is treated as correction to this fall only. Current fall from 117.93 is tentatively treated as resumption of whole fall from 124.13. Firm break of 111.59 low will confirm this case and bring decline to next cluster support zone of 61.8% retracement of 101.65 to 124.13 at 110.23 and 61.8% projection of 124.13 to 111.59 from 117.33 at 109.58 first.

EUR/JPY

Daily Pivots: (S1) 162.63; (P) 163.31; (R1) 164.19; «www.actionforex.com»

EUR/JPY continues to press 4 hours 55 EMA (now at 163.89) today. At this point, further rise could still be seen as long as 161.66 support holds. But still, another fall in favor as long as recovery from 160.46 is limited by 164.53 support turned resistance. Below 161.66 will bring retest of 160.46 support. However, break of 164.52 will suggest that price actions from 167.72 is developing into sideway consolidation instead of a deep correction and should bring retest of this high.

In the bigger picture, prior break of trend line support (137.16, 150.75) confirmed that medium term rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel, keeping the long term up trend from 88.97 (00 low) intact. Hence, price actions from 168.93 is still treated as correction to the long term up trend only. Though, sustained break of 168.93 is needed to confirm such long term up trend has resumed. Otherwise, another fall could be seen before completing the consolidation. Decisive break of 160.67 cluster support will indicate that the last leg of consolidation has possibly started for a retest of 149.27 low.

Forex News Digest

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Fri, 26 Oct 2007 01:50:00 GMT from CNBC

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Fri, 26 Oct 2007 01:39:00 GMT from Reuters UK

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Fri, 26 Oct 2007 01:05:00 GMT from NEWS.com.au

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Fri, 26 Oct 2007 00:41:00 GMT from Reuters

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Fri, 26 Oct 2007 00:21:00 GMT from Yahoo! News Australia

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:30 JPY Japan Tokyo CPI Y/Y Oct 0.10% 0.00% -0.20% -0.10%
23:30 JPY Japan National CPI Y/Y Sep -0.20% -0.10% -0.20%
23:50 JPY Japan Industrial prod’n M/M Sep -1.40% -1.30% 3.50%
23:50 JPY Japan Industrial prod’n Y/Y Sep 0.80% 1.00% 4.40%
6:00 EUR Germany Gfk index Nov 4.9 6.5 6.8
7:15 CHF Swiss Combined PPI M/M Sep 0.30% 0.30%
7:15 CHF Swiss Combined PPI Y/Y Sep 2.90% 2.70%
8:00 EUR Euro-Zone M3 sa Y/Y Sep 11.40% 11.60%
8:00 EUR Euro-Zone M3 sa (3 mth ave.) Sep 11.60% 11.40%
14:00 USD U.S. U of Michigan survey Oct 82.5 83.4

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