EURUSD-EUR made another run to the upside yesterday putting in a fresh one-month high of 1.2799 in continuation of its recent short term upside gains. It however hesitated and subsequently sold off closing lower forming a spinning to top candle at the end of the day suggesting a waning momentum which is also evidenced by overbought conditions now displayed by the daily studies. Such weakness could see EUR push towards its two months broken falling trendline(red) and Friday high at 1.2750/41 with a loss of these levels signaling further downside prices towards 1.2710/09 levels, where its .50 Ret and 100 ema coincide. Further down,a strong support zone is seen at 12629/41 levels, the location of its Sept’06 lows and Oct 19’06 high. These levels are expected to cap further downside slide preserving its current short term uptrend bias with a break to the downside suggesting a retest of its Oct’06 lows at 1.2488/82.On the upside,EUR should challenge the 1.2830 levels, its Sept 22’06 high after unwinding its overbought condition. A sustained break of these levels will put the pair in position to push towards retesting its year-to-date high at 1.2981.On the whole,EUR is losing momentum near term and should correct lower to unwind this oversold condition.
Support Comments 1.2709/12 100 ema/.618 Ret 1.2629/69 Sept’06 lows/Oct 02/04’06 lows 1.2560 July 26’06 low 1.2459/77 Jun/July’06 lows
Resistance Comments 1.2830/79 Aug 31’06 high/Sept’06 highs 1.2981 Year-to-date high 1.3126 April’05 high 1.3482 Mar’05 high
GBPUSD-GBP rallied to a high of 1.9135 on Wednesday but failed to hold above that level and later collapsed closing at 1.9071 at the end of the day. With a new three-month high and positive weekly studies, the pair still maintains its short term bullish outlook and should push higher in the days ahead with initial resistance coming in at the 1.9088/19143,its long term falling trendline(Since Dec’04) and year-to-date high ahead of its April’05 high at 1.9218 followed by its Mar’05 high at 1.9327.However,since overbought condition is now a factor on the daily chart, corrections/pullbacks cannot be ruled out. In such a situation,GBP should push for lower prices towards its psychological level, broken short tern trendline,.782 Ret and Friday high at 1.9003/00.If this convergence of support fails the pair could target /1.8897/1.8925 levels, its .618 Ret/Oct 03&26’06 highs ahead of 1.8858/26 zone, its Oct 20’06 and .50 Ret with a break exposing 1.8671,its Oct 24’06 low. On the whole, GBP is expected to extend its upside gains as its longer term momentum indicators are still supporting this view
Support Comments 1.9003/00 Psychologicallevel/broken trendline/.782 Ret 1.8897/1.8918 Oct’06 high/Sept 14’06 high 1.8858/56 .618 Ret/Oct 20’06 high 1.8739/33 Oct 17&18 highs
1.9088/1.9143 Aug’06 highs/LT trendline 1.9218 April’05 high 1.9327 Mar’05 high 1.9552 Dec’04 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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