EURUSD-After four consecutive days of gains last week, EUR opened the week lower pushing to a low of 1.2699 from a high of 1.2750 on Friday. Its upside momentum is now weakening as overbought condition is now a factor therefore pullbacks/corrections should follow in order to unwind this condition before resuming its short term bullish trend. The convergence of 100 ema,.50 Ret and its broken falling trendline( blue) at 1.2712/05 look to contain any weakness initially with a failure paving the way for the pair to push towards 1.2629/41,its Sept’06 lows/Oct 19’06 high. These levels, now serving as resistance turned support should hold and push the pair to the upside but if a failure is seen,EUR could be on its way to retesting its recent lows at 1.2488/82 thereby neutralizing its recent upside gains. On the upside, the 1.2761/66 levels which is the confluence of .618 Ret, formerly broken rising trendline(magenta) and Oct’06 high is seen as the immediate resistance followed by its Sept 22’06 high at 1.2830 ahead of its year-to-date high at 1.2981.On the whole, EUR should experience corrective losses following its recent gains within the broader market range.
1.2830/79 Aug 31’06 high/Sept’06 highs 1.2979 July’06 high 1.3126 April’05 high 1.3482 Mar’05 high
GBPUSD- GBP open the week higher rising to a high of 1.9042 yesterday ahead of its Sept 25’06 high at 1.9088, which is now the immediate target. Breaking of this level exposes the 1.9143 level, its year-to-date high with a break and close above this level signaling the resumption of its longer-term uptrend on hold since its confinement to its broader range began six months ago. However, as can be seen from the chart, GBP is overbought making it vulnerable to pullbacks/correction in the days ahead. Such pullbacks should push the pair towards its .618 Ret/Oct’06 high at 1.8900/1.8897 where support is expected to hold but if it breaks down its Oct 20’06/.50 Ret at 1.8858/26 will be the next target before its Oct 24’06 low at 1.8671.On the whole, GBP maintains its upside tone as long as it remains above 1.8858/97 levels.
Support Comments
1.8897/1.8918 Oct’06 high/Sept 14’06 high 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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