EURUSD-EUR traded in a tight range yesterday achieving a mild upside move towards 1.2313 levels before closing at 1.2592.This puts this pair firmly below its Sept’06 lows at 1.2639/29 broken on Friday last week. With its weekly studies continually positive and pointing to the downside more losses should be seen. In such a situation, its July 26’06 low at 1.2560 becomes its next target, which was tested in early morning trading as at time of this analysis. A successful erosion of this level exposes another significant support at 1.2459, its July’06 low. Although the weekly momentum favours further downside price losses, the daily studies are now oversold resulting from its recent sell off and any hesitation by price at its present level should trigger a bounce higher with 1.2639/29 likely to cap such moves before it rolls over to the downside and continue with its lower level price losses. From the longer term perspective, EUR remains confined to a range between 1.2979 on the upside and 1.2459 on the downside. With EUR poised to push lower, the bottom of the range denoted by a horizontal trendlines/1.2459 level should give way and set the stage for the next move to the downside. On the whole, EUR is vulnerable to further price losses in the days and weeks ahead.
Support Comments 1.2561/60 .786 Ret/July 26’06 low 1.2561/60 .786 Ret/July 26’06 low 1.2459 July’06 low 1.2360 April 19'06 low
Resistance Comments 1.2663/29 Sept’06 lows/.618 Ret (July-Aug rally) 1.2700/21 100 emsa/Rising trendline 1.2830/79 Aug 31’06 high/Sept’06 highs 1.2971/1.3000 May’06 high/Psychological
GBPUSD-GBP sold off below its 100 ema at 1.8692 and tested its Sept 29’06 low at 1.8632 before closing at 1.8662 yesterday. It followed through to the downside below 1.8600 in early morning trading today. As long as this pair stays below its broken 100 ema/Sept 29’06 low, short term trend outlook remains bearish and further downside price losses are expected. In addition to this bearish outlook, weekly momentum indicators are pushing to the downside supporting the above scenario. Further downside price losses see the pair losing its hold on 1.8602 levels, its Sept’06 low ahead of 1.8384, its July 25’06 low. A break of this level should accelerate losses towards its July’06 low at 1.8175.However; oversold condition has set in on the daily chart so it might need to unwind this condition before it continues its downtrend moves. On such a bounce, its broken 100 ema now at 1.8692 should reverse roles as resistance and send the it lower. On the whole, more downside price losses should be seen in the days and weeks ahead.
Support Comments 1.8600/02 .50 Ret/Sept’06 low 1.8500/1.8489 .618 Ret/Round number 1.8389 July 26’06 low 1.8175 June’06 low
Resistance Comments 1.8692 100 ema 1.8801/36 50 Ema/Broken rising trendline 1.8929/18 Broken rising trendline/Sept 14’06 1.9088 Aug 31’06 high 1.9143 Aug’06 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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