EURUSD-EUR has convincingly broken and closed above 1.2629/41 levels, its Sept’06 lows/Oct 19 & 20’06 highs yesterday bringing to three days of the numer higher closes since the beginning of the week. This new upside pressure has put a temporary stop to its recent sell off and opened the doors for further upside gains within its broader range in place for the past six months. Such gains should push EUR towards its strong upside target at 1.2709/14 levels, the convergence of .50 Ret, 100 ema and falling trendline(established since Aug’06).A successful penetration of these levels is required to put the pair in position to challenge its Oct’06 high/.618 Ret at 1.2762/65 ahead of 1.2830/73,Its Sept’06 highs.Although the above view is supported by daily studies which are now trending higher, as indicated in yesterday’s analysis on the significance of the 1.2709/14 zone, the early morning trading today has seen a new high(1.2714) followed with a bounce off that zone creating a bearish engulfing candle pattern on the 4hrs chart(not shown here) which is already in an oversold condition. What this translate to is EUR may likely see a pullback towards its horizontal lines drawn along Sept’06 lows which is now expected to reverse roles as support and push the pair higher for a second challenge of the 1.2709/14 zone. A failure at the horizontal support if seen increases the chances of EUR retesting its Oct’06 lows at 1.2488/82 levels.On the whole, EUR is expected to push for upside gains within the broader range in the days and weeks ahead.
Support Comments 1.2629/69 Sept’06 lows/Oct 02/04’06 lows 1.2560/80 200 ema/July 26’06 low 1.2459/77 Jun/July’06 lows 1.2333/25 April 19'06 low
Resistance Comments 1.2709/13 100 ema/Falling trendline/.618 Ret 1.2830/79 Aug 31’06 high/Sept’06 highs 1.2979 July’06 high 1.3126 April’05 high
GBPUSD-GBP rallied for the second day on Thursday taking out its Oct’20’06 high/ .618 Ret (1.8856/58) to close the day at 1.8892. (Slightly below its Oct’08 high at 1.8897).A sustained close above its Oct’06 highs would be needed to put it on the pathway to higher price gains and possibly push for a retest of its Aug/Sept’06 highs at 1.9073/88 ahead of its year-to-date-high at 1.9143.As can be seen from the chart, the momentum indicators displayed at the bottom are positive and pushing higher suggesting that higher level prices are expected. On the other hand, a failure of price to push to the upside at the current levels could see the pair pushing below 1.8858/56 levels enroute to retesting its Oct 24’06 low at 1.8671 with a risk for further price losses towards its recent lows at 1.8522/11.Overall,GBP should push for further upside gains judging from its positive price action and momentum.
Support Comments 1.8858/56 .618 Ret/Oct 20’06 high 1.8739/39 Oct 17&18'06 1.8602/32 Sept 29’06 lows 1.8492/1.8511 .618 Ret/Oct 10’06 low
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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