EURUSD- EUR halted its recent decline off its Sept 22’06 high on Wednesday following a bounce off its two months rising trendline established in July’06 and its .786 Ret (1.2629-1.2830 rally).This could be a reaction to an oversold condition on the 4hrs which has pulled out and is now heading higher suggesting that a push higher towards 1.2724/40(50/100 emas) levels could follow before a rollover to the downside. This view is supported by the daily momentum studies as well as the weekly RSI, which is pushing to the downside implying that lower level losses are still expected.On the other hand,a successful close above 1.2724/40 levels should open the doors for EUR to push towards retesting its Sept 22’06 high at 1.2830. Overall, EUR is limited within a broader range between 1.2981 on the upside and 1.2459 on the downside. Until this range is broken, long-term direction of this pair remains on hold.
GBPUSD-GBP continues to push to the downside closing yesterday at 1.8901 after putting in a low of 1.8851.This pair is expected to experience further downside losses towards its long-term trendline judging from the momentum indicators at the bottom of the chart, which are clearly bearish and continue to push lower. In a related development, GBP sold off in early morning trading today to a low of 1.8811 as at the time of this analysis. With no meaningful support in sight after its 50 ema, GBP’s next target is its rising trendline(mentioned above) dating back to April’06 currently at 1.8757.This level which is also within the vicinity of its Sept 18’06 low at 1.8735 is expected to hold and push it higher but a failure at this levels would see the pair pushing towards 1.8602,its Sept’06 low.On the whole,GBP is expected to see more down days in the days and probably weeks ahead.
Support Comments
1.8757/1.8800 Rising trendline/Round number
1.8621/02 .50 Ret/Sept’06 low
1.8500/1.8489 .618 Ret/Round number
1.8306 .786 Ret
Resistance Comments
1.8918/00 Sept 14’06 high
1.9000/80 Psychological level/Sept’06 high
1.9143 Aug’06 high
1.9218 April’05 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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