EURUSD-Following its recent upside gains taking it to a high of 1.2799 on Wednesday, EUR hesitated at this level late last week and subsequently collapsed on Friday to a low of 1.2679 to close the week at 1.2716 pushing back below its earlier broken short term falling trendline.This marks the first of such a lower weekly close since it took off from its Oct’06 lows at 1.2482/88 two weeks ago. Friday’s sell off was supported by overbought condition displayed by momentum studies on the daily chart which has persisted for almost one week now.EUR should see more downside prices following this new losses initially towards 1.2679/39 levels, its Oct 31 & Nov 03’06 lows,Sept’06 lows and .50 Ret(Oct-Nov)with a break halting its recent upside gains and putting pressures on the downside towards 1.2560 level, its July 26’06 low ahead of 1.2488/59,its Oct and July’06 lows/broader range bottom. Daily studies remain supportive of this view as they have pulled out of overbought zone and are heading lower. On the other hand, a break of its recent high at 1.2799 followed with a successful close above 1.2830 level, its Sept 22’06 high will open the door for a retest of its year-to-date high at 1.2981 and probably beyond.Overall,EUR is still confined to a six-month range between 1.2981 on the upside and 1.2459 on the downside with a break needed to stage a meaningful directional moves.
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 1.2799/1.2830 Nov’06 high/Sept 22’06 high 1.2981 Year-to-date high 1.3126 April’05 high 1.3482 Mar’05 high
GBP Rejects Higher Level Prices
GBPUSD-After hitting a high of 1.9135 last week and experiencing a wane in upside momentum on Wednesday and Thursday, GBP sold off to a low of 1.8972 pushing below its broken short-term falling trendline and testing its Oct 27’06 high before closing at 1.9115 on Friday. This sell off also coincided with overbought condition on the daily chart and in early morning trading today GBP was seen testing its Friday lows. With the price heading lower and the daily studies negative coupled with a formation of a shooting star candle pattern on the weekly chart(a sign of price weakness on the upside), a run to the downside could be seen towards 1.8897/58,its Oct 03 & 20’06 highs where a break to the downside is required to allow for further losses towards its Oct 24’06 high at 1.8671 ahead of its Oct’06 lows at 1.8522/11.On the upside, a penetration and negation of 1.9073/88 levels, its Aug and Sept’06 highs/Long term trendline followed with a decisive break and close above 1.9143,its year-to-date high is needed to signal the resumption of its primary uptrend. On the whole, GBP looks to test lower level prices in the near term.
Support Comments 1.8897/58 Oct’06 high/.618 Ret/Oct 20’06 high 1.8739/33 Oct 17&18’06 highs 1.8671 Oct 24’06 low 1.8522/11 Oct’06 lows
Resistance Comments 1.9000/06 Psycho/level/broken trendline/.782 Ret 1.9088/1.9143 Aug’06 highs/LT trendline 1.9218 April’05 high 1.9327 Mar’05 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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