EURUSD-Following its sell off which began on Friday last week, EUR continued to the downside yesterday selling off to a three-month low at 1.2515 and breaking through its July 26’low at 1.2560 to close the day at 1.2532.It now looks set to push towards its June/July’06 lows at 1.2477/59 which coincides with its horizontal support line drawn along previous highs and lows coming at 1.2458 level. A break below these levels is required to bring EUR out of its broader range established since it hit a top in May/June this year. On a sustained break and close below this broader range ,EUR’s next significant support comes in at 1.2333/25,its Jan/April’06 highs ahead of its Mar’06 high at 1.2210.However,daily momentum indicators are oversold so it is expected that a bounce may be shaping up. In such a case, 1.2560 should now reverse roles as resistance but a break above this level could see EUR pushing towards its Monday high at 1.2615 where a failure is expected. Overall, EUR looks set to challenge its broader range bottom/horizontal trendline(1.2477/58) and possibly break below it in the days and weeks ahead. Weekly and monthly momentum indicators remain in support of this view.
Support Comments 1.2518/00 Oct’06 low 1.2459 July’06 low 1.2360 April 19'06 low 1.2210 Mar’06 high
Resistance Comments 1.2615 Oct 10’06 high 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 made a three-month low at 1.8525 yesterday breaking below its Sept’06 lows at 1.8602/32.As long as it trades below these levels further downside price losses should follow towards its next support at 1.8463/1.8384,its 200 ema/July 25’06 low ahead of 1.8175, its July’06 and if this level gives way, we should see a move towards 1.8088,its June low. Conversely, if GBP, which is now oversold holds at its present level, it could push to the upside in order to unwind the oversold condition but such a corrective bounce should be contained by 1.8602/32 levels, its Sept’06 lows and bring the resumption of its present sell off. All in all, more downside price losses are expected in GBP as is evidenced by the bearish signals generated on its longer term charts..
Support Comments 1.8492/1.8513 .618 Ret/Oct 10’06 low 1.8389 July 26’06 low 1.8175 June’06 low 1.8088 June’06 low
Resistance Comments 1.8602/32 .50 Ret/Sept’06 lowS 1.8692 100 ema 1.8801/36 50 Ema/Broken rising trendline 1.8918 Sept 14’06 high 1.9088 Aug 31’06 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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