Fundamental Analysis, January 28, 2011




A negative trend has been recorded this morning in Asia's stock markets, with the sharpest decline recorded by the Japanese stock exchange. Index declines on the continent have occurred on the background of the decision of the S&P credit ratings agency to cut Japan's sovereign credit rating to a level of AA- from a previous rating of AA. The Japanese Nikkei has reacted to the move with a 1.1% decline.
In the American macroeconomic arena, the Department of Labor reported yesterday that the amount of first unemployment filings in the United States grew by 51 thousand to a total of 454 thousand new unemployment claims. The economists have expected a far more moderate ascent in the amount of new weekly filings to a level of 405 thousand. Furthermore, the Department of Commerce announced that the amount of orders for non-consumable goods in the United States declined by 2.5% during the month of December. The economist’s prediction was for a 1.4% rise.
The Department has announced further that new home sales in the United States leaped up in September by the sharpest rate in the last 19 years due to a 72% rise in home sales in the Western United States. We note that new home sales leaped up by 18% in the last month – the sharpest rate since 1992.


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EUR/JPY Bearish Forecast , January 28, 2011 (Daily Strategy)



EUR/JPY
Only a Breach of the 114.00 resistance level will cancel the prediction bearish on the pair.
The pair has broken the trend line that had formed in 4 hours, therefore
a return to their pullback trendline and not violate confirm our point of entry into 113.20, or a daily close below 112.40 would confirm our bearish forecast.

The downwards Movement is Expected to carry the pair down to the lower support level of 109.40.

EUR/USD wave analysis for January 28, 2011



During yesterday’s trading the EUR/USD currency pair has finally reached the correction level 76.4%. At the same time, inner wave structure of the 5th wave in the estimated c does not look complete at the moment. It is worth mentioning that complex inner structure of the 5th wave gives the euro an opportunity to continue growth to the respective parity of the waves a and c near the 1.3830 level. However, given strongly overbought indicators, a reverse of the price down after another attempt to pass the 1.3740 – 1.3755 level.



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GBP/USD wave analysis for January 28, 2011



The GBP/USD currency pair missed a few pips to reach the 1.6000, initiated a rollback and declined by almost a figure. However, in the current upside section the pound has a real chance to test early highs near 1.6055 and reach 1.6060, having formed a five-wave uptrend structure, developing since December 28. At the same time, the price still has potential to form a more complex inner wave structur of the 4th wave by declining to targets near 1.5700.



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USD/JPY Intraday Technical analysis



The spot rate is currently testing the upper limit of its medium term trading range at 83.20. A break of these levels would free up significant potential and begin an upward trend.
According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 83.20 with a 1st objective of 83.70, then 84.10. A break in 83.00 would invalidate this scenario.



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GOLD Intraday Technical analysis



Gold is currently testing the lower limit of its medium term bearish channel at 1308 suggesting a rebound in the short term. However a break of these levels would initiate a more violent downward trend.
According to previous events, the market indicates a bullish opportunity on the levels of 1308 with a 1st objective of 1322, then 1327. A break in 1306 would invalidate this scenario.



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This post has been edited by jebat66: Jan 29 2011, 02:22 AM

GBP/USD Intraday Technical analysis



The spot rate approaches the upper limit of its medium-term bearish channel at 1.5990. A break of these levels would free up significant potential and begin an upward trend.
According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 1.5990 with a 1st objective of 1.6070, then 1.6090. A break in 1.5970 would invalidate this scenario.



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This post has been edited by jebat66: Jan 29 2011, 02:23 AM

EUR/USD Intraday Technical analysis



The spot rate is currently testing the upper limit of its medium-term bullish channel at 1.3760 suggesting a decline in the short term. A return on its intermediate support at 1.3670 is possible.
According to previous events, the market indicates a bullish opportunity on the levels of 1.3670 with a 1st objective of 1.3760, then 1.3780. A break in 1.3650 would invalidate this scenario.


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This post has been edited by jebat66: Jan 29 2011, 02:23 AM

USD/JPY wave analysis for January 28, 2011



The decision of S&P agency to cut Japan's sovereign debt rating made the USD/JPY drop by 100 pips in favour of the dollar. At the same time, given the current wave situation, we might suppose that after a slight decline of the price (probably in the range of the 4th wave) the growth can resume in the direction of the first target near 83.50.



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GBP/CHF candlestick analysis for January 28, 2011





On a 4-hour graph the rollback of the pair from 1.4850 was limited by the resistance level 1.5100.
Earlier on a 4-hour graph the GBP/CHF has formed candlestick combination Falling Three Methods, which indicates downside movement, confirmed further.
This candlestick combination shows that the currency pair had been demonstrating upside movement for several weeks after an unsuccessful attempt to break the support level 1.4400. However, it reversed near 1.5400. This implies that the bears became more active at this point and the bulls could not solidify here. The breakthrough of the support level 1.5100 and the Fibonacci correction level 38.2 proves this viewpoint.
As mentioned before, if the support level 1.4850 is broken, downside movement targeted at 1.4400 should be expected.
It is worth mentioning that stop loss should be placed slightly above 1.5192 as the breakout of this level will target the GBP/CHF to 1.5400.




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USD/JPY candlestick analysis for January 28, 2011


On a 4-hour graph the USD/JPY currency pair is rolling back after it broke the upper limit of the downside channel. However, the growth was limited again by the Fibonacci correction level 61.8.
As mentioned before, if the support level 80.93 is broken, long positions should be closed as a break of this level will cause the pair to decrease to 80.20.
Earlier on a 4-hour graph the USD/JPY pair has formed Hammer candlestick, indicating upside movement. This candlestick shows that the currency pair was decreasing for several days, but rebounded near 80.93.
This viewpoint is supported by the fact the pair has successfully broken the 23.6 Fibonacci correction level. Breakout of the resistance level 82.85 has targeted the pair to 84.50. 





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Technical overview of the instrument SILVER according to the Regression channels system for January 28, 2011

4-hour timeframe



Technical data:
Head channel of the linear regression: direction –up
Low channel of the linear regression: direction - down
Moving average (20; smoothed) – down
CCI: -86.1244

Explanation:
Silver, just as gold, is currently in the downside movement, which is able to reverse the uptrend down; there are no signs of completed downside movement though. Head channel is directed upwards, which indicates continuing (yet) uptrend in the long term. Low channel is directed downwards, which indicates the continuation of the correction movement in the short run. The moving average is directed down; the price in its turn is below it, which shows continuing downside movement. Low channel that reversed down implies that the correction might extend or turn to a downtrend. Therefore, it is recommended to trade down with a target at 26.56. In case the price overcomes the level “2/8”, the next target will be the level «1/8» - 25.78. Upside movement will only start after the price fixates above the moving. If the price fixates above the moving average, it is recommended to cut short positions. CCI is near the -100 level, which indicates slight overbought.


The closest support levels:
S1 – 26.56
S2 – 25.78
S3 – 25.00

The closest resistance levels:
R1 – 27.34
R2 – 28.13
R3 – 28.91
Trading recommendations:
At the moment we observe the continuing downside movement. The price is between targeted to the 26.56 level. If this level is passed, the downside movement will continue with a target at 25.78. For up trading it is recommended to wait until the price fixes above the moving. Stop loss should be placed above the moving or the closest Murray level.

In addition to technical image, one should take into account the fundamental data and the time of their release.
The chart annotation:

Head channel of the linear regression –uni-directional moving blue lines.
Low channel of the linear regression - uni-directional moving purple lines.
CCI – blue line in the indicator’s window.
Moving average (20; smoothed) – blue line on the price chart.
Murray’s levels – multi-colored horizontal lines. 



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USD/CHF wave analysis for January 28, 2011



As expected, the second attempt to overcome the correction level 76.4% was unsuccessful and caused the USD/CHF trying to roll back in favour of the dollar. At the same time there is parity between the estimated waves a and c of the whole downside section, developing since January 11. Based on this, we might suppose that the pair will continue its upside movement in the direction of the estimated target near the 96 figure levels.



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USD/CAD technical analysis for January 28, 2011


Support levels: 0.9910, 0.9820, 0.9711
Resistance levels: 1.0026, 1.0050, 1.0212

Lately the USD/CAD has been demonstrating sideways movement. Market participants are expecting it to be trapped in the range between 0.9910 and 1.0020 in the nearest future. Therefore, the viewpoint to the pair is still neutral.
As mentioned before, if the USD/CAD breaks the 1.0026 resistance level further advance to 1.0212 should be expected. Further break of the 1.0380 level will denote that the rollback from 1.0680 is completed and further growth should be expected.
However, if a reversal takes place break of the 0.9820 support level will target the pair to 0.9711.
In the midterm the breakout of the support level at 0.9930 indicated continuing midterm downtrend from 1.3063 (2009 high) with 0.9700 as a target. However, this downside movement is probably a correction, and strong support level is located near 0.9056-0.9700.
Thus, if a reversal takes place, the breakout of 1.0851 will prove the downtrend broken through from 1.3063. In this case the USD/CAD is expected to go up to the resistance level 1.1126 with 1.1866 as the next target. 






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This post has been edited by jebat66: Jan 29 2011, 02:41 AM

GBP/JPY Elliott wave count and Fibonacci levels - January 31, 2011

The GBP/JPY is still moving in wave C of daily degree (colored light green in the chart). But break below 129.49 will end this wave. At this moment the targets below the current price level are Fibonacci retracements of 125.47-132.64.Supports:
- 129.90 = .382 retracement - already hit (!)
- 129.06 = .50 ret
- 128.21 = .618 ret
If the uptrend resumes the nearest resistances will be Fibonacci retracements of 132.64-129.75, and expansions off 129.49-132.64-129.75.
Resistances:
- 130.85 = .382 ret
- 131.19 = .50 ret
- 131.54 = .618
- 131.70 = contracted objective point (COP)
- 132.90 = objective point (OP)



Overbought/Oversold
Assuming that the medium term trend is still up it's preferable to use oversold readings of the Detrended Oscillator or its cross below the zero to consider long positions. However to start considering long position break above at least 130.38 is needed (previous high), which will terminate the wave 132.64-129.75.
Read more on how to apply Fibonacci studies to calculate price targets.



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