EURUSD-Following its rise off its recent lows at 1.2482/88 levels, EUR closed (1.2616) the week higher on Friday forming a bullish engulfing pattern on the weekly chart (a bullish reversal signal that needs a follow-through on the upside as confirmation).Despite its upside gains last week, EUR hit 1.2629/39(Sept’06 lows) resistance levels and subsequently backed off suggesting how significant these levels are. In addition, such a failure is not surprising as EUR remains in a corrective mode following its recent decline. With the oversold condition eased and the RSI negative and pushing lower, this pair should push to the downside towards 1.2568/60 levels, its July 26’06 low/200 ema followed with an attempt at challenging its Jun/July’06 lows at 1.2477/59.A successful penetration of these levels put further downside price targets at 1.2000 levels established by measuring the width of the broader range and projecting it from the breakout point.On the upside, resistance comes in at 1.2629/39 zone with a violation targeting Oct’06 highs at 1.2756/65.On the whole,EUR should push for downside price losses and probably its short term trend after its corrective moves are over.
Support Comments 1.2560/1.2615 Oct 10’06 high/200 ema/Sept 26’06 low 1.2459/77 Jun/July’06 lows 1.2333/25 April 19'06 low 1.2210 Mar’06 high
Resistance Comments 1.2639/29 Sept’06 lows 1.2703/12 100 ema/Rising trendline 1.2830/79 Aug 31’06 high/Sept’06 highs 1.2979 July’06 high
GBPUSD-After putting in four daily higher closes out of five days last week closing as high as 1.8858 and forming a weekly bullish engulfing candle pattern( a bottom reversal signal)GBP has started losing momentum on the upside. This can be clearly seen on 4hrs chart where higher prices have not been confirmed by the RSI indicator causing a bearish divergence suggesting a weakening momentum. This has even more significance as the pair approaches its former Oct’06 highs at 1.8884/97 where a failure could be seen for downside price losses towards its Oct 17&18’06 highs at 1.8739/33 ahead of its Sept 29’06 low/Oct 13’06 high at 1.8636/32.A break of this levels could see this pair pushing towards its Oct’06 low at 1.8511 especially now that the daily RSI is negative implying further downsides losses in the days ahead. On the other hand, Oct’highs at 1.8884/97 and Sept’06 highs at 1.9063/80 are its upside ceilings. On the whole, nearer term downside losses are expected in this pair.
Support Comments 1.8602/32 Sept 29’06 lows 1.8492/1.8511 .618 Ret/Oct 10’06 low 1.8389 July 26’06 low 1.8175 July’06 low
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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