EURUSD-EUR put in a new low yesterday at 1.2498, bringing to three days in a row of daily lower closes this week since its decline began last week. This continues to support its short term bearish outlook as it approaches a strong support provided by its broader range bottom at 1.2459/77,a level that also coincides with a horizontal support line(1.2458) drawn off its past highs and lows. A break below this range will give a prices objective of about 1.2011, achieved by measuring the height of the range and projecting it from the breakdown point.Additionally, such a break has immediate layers of support to contend with coming at 1.2396(April 19’06 high) followed by 1.2325/33(Jan/Aprils high/1.272 Fib Ext).On the other hand, EUR is heavily oversold following its recent decline. As such, a bounce higher towards 1.2560(July 26’06 low) ahead of 1.2618/39(Tuesday high) could follow to ease this condition before it rolls over to challenge its range bottom. On the whole, EUR is oversold and a bounce is expected.Holding below 1.2618/39 levels puts it in position to quickly push to the downside.
Support Comments 1.2459/77 Jun/July’06 lows 1.2360 April 19'06 low 1.2210 Mar’06 high 1.2068 April 12’06 low
Resistance Comments 1.2615 Oct 10’06 high 1.2639/29 Sept’06 lows 1.2703/12 100 ema/Rising trendline 1.2830/79 Aug 31’06 high/Sept’06 highs
GBPUSD-After a run to the downside following a break back below its rising trendline and a subsequent push below its Sept’06 lows, GBP put in a positive close yesterday forming a spinning top candle pattern, a sign that momentum is waning. With oversold condition now a factor, a corrective rally should follow. In such a situation, GBP should push towards 1.8602/32 levels, its Sept’06 lows which is expected to reverse roles as resistance and push the pair lower towards its 200 ema currently at 1.8464 enroute to its July’06 lows at 1.8384/ 1.8175.A loss of these levels, clears the way for a move towards its Jun’06 low at 1.8088 and beyond. A risk to this analysis will be a close above its Sept’06 lows followed by a sustained close above 1.8800 levels. On the whole,GBP is expected to push lower after unwinding its oversold condition.
Support Comments 1.8492/1.8513 .618 Ret/Oct 10’06 low 1.8389 July 26’06 low 1.8175 July’06 low 1.8088 June’06 low
Resistance Comments 1.8602/32 .50 Ret/Sept’06 lowS 1.8686 100 ema 1.8781/1.8836 50 Ema/Broken rising trendline 1.8918 Sept 14’06 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC
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