EURUSD-EUR pushed higher off its Oct’06 low (1.2498) to close at 1.2566 yesterday, the first of such a close since the beginning of the week. This price action has formed a bullish engulfing pattern, which has possible bottom reversal implications. This could be a reaction to an oversold condition which it has been experiencing following its recent decline off its Oct’06 high(1.2765).Further price gains resulting from oversold condition may see EUR pushing towards 1.2618,Oct 10’06 high ahead of 1.2639/65(Sept’06 lows/cluster of resistance). As long as EUR holds below these levels, further downside losses towards its Oct’06 low at 1.2498 and a likely break of its range bottom/horizontal support line(1.2459/77) is expected in the days and weeks ahead. On the whole, EUR is poised to break its broader range bottom (1.2477/58) which is supported by its longer term momentum studies.
Support Comments 1.2459/77 Jun/July’06 lows 1.2333/25 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-GBP rallied yesterday pushing above 1.8600 levels before closing below it at the end of the day at 1.8588.This pair remains in a corrective mode, which is a reaction to oversold condition displayed by daily momentum indicators. A break above 1.8602/32(Sept’06 low) levels which is now challenging could see it testing its 100 ema currently at 1.8685 where it is expected to fail and push for further price losses towards its Oct’06 low at 1.8511 ahead of its July 26’06 low at 1.8384.GBP should challenge its Jun/July’06 lows and possibly break these levels if 1.8384 gives way. Longer-term momentum studies remain in support of this view.Overall, GBP is expected to push to the downside in continuation of its recent sell off in the days ahead.
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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