EURUSD- EUR stalled at 1.2756/65 levels yesterday and pushed to the downside to close at 1.2732, failing to sustain its Monday gains. In early morning trading, the pair was seen challenging/moving towards the 1.2700 levels which is a few pips from its three months rising trendline now at 1.2691.With its inability to hold above 1.2756/65 levels and the fact that its 4hrs chart studies are pushing to the downside, a test of 1.2700/1.2691 levels, which is where the rising trendline is located could be seen and probably a successful break lower could also occur. Such a break targets its Sept’06 lows at 1.2639/29 followed by its July 26’06 low at 1.2560 ahead of its July’06 low at 1.2459.Conversely, holding above 1.2700 levels could see EUR pushing for a retest of Oct’06 high at 1.2765 ahead of 1.2830,its Sept 22’06 high. Overall, EUR remains in a range and needs to breakout this range to set the stage for the next move.
Support Comments
1.27100/1.2691 Cluster of support/Rising trendline
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-Following a rally to a high of 1.8897 off its Sept 29’06 low on Monday; GBP has been consolidating and holding above 1.8817/00 levels (cluster of support).A continued hold on to these levels puts the pair in position to push to the upside quickly for a retest of its tuesday high at 1.8897 ahead of its Sept’06 high at 1.9073.In addition, its daily stochastics remains supportive of this view. As indicated in our analysis yesterday, a failure at its recent high followed with a break back below its broken rising trendline voids the upside view and brings the resumption of its short-term downtrend into focus. Such a situation will see GBP targeting 1.8632/02, its Sept’06 lows ahead of its July 26’06 low at 1.8389.On the whole, as long as GBP remains above 1.8817/00 levels, higher level price gains are possible.
Support Comments
1.8826/00 50 Ema/Round number
1.8621/02 .50 Ret/Sept’06 low
1.8500/1.8489 .618 Ret/Round number
1.8389 July 26’06 low
Resistance Comments
1.8929/18 Broken rising trendline/Sept 14’06
1.9088 Aug 31’06 high
1.9143 Aug’06 high
1.9218 April’05 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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