EURUSD-EUR opened the week powering off its three months rising trendline established since July’06 to close at 1.2745, above its 50/100 emas(1.2718/36).A retest of its Sept 22’06 may be on the cards if it can hold above the mentioned levels. Since a follow through to the upside off its Friday’s rejection candle has materialized, holding above 1.2718/36 levels could see this pair retesting 1.2830 level. Although the 4hrs momentum is weakening resulting from overbought condition which may lead a pullback/correction, the daily studies turned up and are pointing to the upside suggesting that higher prices could be seen first towards 1.2830 and later towards 1.2939/81 levels(broader range top) in the days ahead. A failure at this present level pushing the pair below its rising trendline turns the bias towards the resumption of its short-term downtrend bringing 1.2639/29,its Sept/Oct’06 lows and 1.2560,its July 26’06 in to focus. On the whole,EUR remains confined to a broader range of 1.2981 on the upside and 1.2459 on the downside. A break of this range is needed to set the tone for the next move in this pair.
Support Comments
1.2718/36 100/50 Emas
1.2663/29 Sept’06 lows/.618 Ret (July-Aug rally)
1.2561/60 .786 Ret/July 26’06 low
1.2459 July’06 low
Resistance Comments
1.2830/79 Aug 31’06 high/Sept’06 highs
1.2971/1.3000 May’06 high/Psychological
1.3126 April’05 high
1.3482 Mar’05 high
GBPUSD-GBP has pushed back above its broken six months rising trendline off its 100 ema to close on the high side at 1.8865 yesterday, bringing its one-week decline to a halt. This is coming on the heels of a rejection candle formed at the end of its Friday trading session. The pair was seen moving towards 1.8900 levels as at the time of this analysis. With the daily momentum now pointing to the upside, a break above 18900 levels and a possible retest of its Sept’06 high at 1.9073 is could be seen. On the contrary, a failure at 1.8900 levels followed with a break back below the mentioned rising trendline invalidates the upside view and brings the resumption of its short-term downtrend into focus. Such a scenario will see GBP targeting 1.8632/02, its Sept’06 lows ahead of its July 26’06 low at 1.8389.On the whole,GBP should push towards 1.9073 in the days ahead if it could hold above its 50 ema.
Support Comments
1.8825/00 50 Ema/Round number
1.8621/02 .50 Ret/Sept’06 low
1.8493/18500 .618 Ret/Round number
1.8389 July 26’06 low
Resistance Comments
1.8918/00 Sept 14’06 high
1.9000/80 Psychological level/Sept’06 high
1.9145 Aug’06 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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