EURUSD-EUR sold off yesterday in continuation of its recent failure off its Sept 22’06 high at 1.2830 breaking below its 50 and100 emas/1.2725/00 levels to a low of 1.2663 and testing its two months rising trendline.This development has turned the short term outlook back to the downside making 1.2630,its Sept’06 low the next target. A break of this level will trigger further selling towards 1.2560, its July 26’06 low ahead of 1.2459, its July’06 low. The momentum indicators displayed at the bottom of the charts remain supportive of this view as they have turned bearish and are pushing to the downside. On a rally in the course this recent sell off, 1.2726/52 levels which is where the 50/100 emas and Sept 14’06 high are located should now reverse roles as resistance and push the pair lower. A sustained break above these levels invalidates this analysis. On the whole, EUR is expected to push towards 1.2630 level, its Sept’06 low enroute to 1.2560, its July 26’06 low
GBPUSD-GBP has broken and closed below its psychological yesterday after spending three days above it. It pushed to a low of 1.8890 in early morning trading today as at the time of this analysis. With its daily momentum indicators bearish and pushing to the downside,GBP looks to test its 50 ema currently at 1.8830 and a close below these levels should push it towards its five months rising trendline now at 1.8754. GBP’s inability to hold above its psychological level has shown how significant this level is to the market. It has failed once in May and twice in Aug this year to hold and push price higher therefore its new failure is not surprising. Until 1.9080/1.9143 ceiling is broken, GBP remains vulnerable to lower level price losses or range trading.
Support Comments
1.8918/00 Sept 14’06/Round number
1.8754/41 Sept’06 low/Rising trendline
1.8621/02 .50 Ret/Sept’06 low
1.8500/1.8489 .618 Ret/Round number
Resistance Comments
1.9088 Aug 31’06 high
1.9000 Psychological level
1.9143 Aug’06 high
1.9218 April’05 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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