EURUSD-EUR pushed lower yesterday ahead of a cluster of short-term support at 1.2679/76 levels representing Oct 31’06 and Nov 03’06 lows. The pair subsequently held above these levels and bounced off its 100 ema to close at 1.2726 at the end of the day forming a long lower shadow candle signifying downside price rejection. In a follow through to yesterday’s positive close, EUR pushed to the upside in early morning trading today breaking back above its earlier broken falling trendline(red) and challenging its Oct 03’06 high at 1.2765.This is a constructive price action on the part of this pair for the fact that a close above 1.2765 levels will improve its short term outlook and its chances of retesting its Nov’06 high at 1.2799 with a successful breach needed to challenge 1.2830 level, its Sept 22’06 high. If this level gives way, further upside gains towards its year-to-date high/psychological resistance at 1.2981/1.3000 could be seen. However, if the pair fails to decisively break above its Nov’06 high at 1.2799, likely downside price losses should follow initially towards 1.2750/42 levels followed by 1.2679/76,its Oct 31’06 and Nov 03’06 lows ahead of a stronger support zone coming at 1.2639/29,the locations of its Sept’06 lows. A break below these levels is required to invalidate EUR’s current short-term bias and put pressures on the downside focusing on a retest of its Oct’06 lows at 1.2488/82.All in all,EUR is expected to push to the upside as its weekly momentum is positive supporting its short term uptrend.
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 Opens The Week Lower
GBPUSD-GBP unlike its EUR counterpart closed lower (1.8948) yesterday following its Friday’s sell off on the heels of it recent loss of momentum at the 1.9088/1.9135 levels. Further downside losses could be seen targeting 1.8947/00, its short term rising trendline and .618 Ret where a halt is expected before another attempt at the upside. In an early morning trading today, the pair reversed ahead of the above mentioned levels and pushed to a high of 1.9058 (as at the time of this analysis), a sign that a retest of Nov’06 high at 1.9135 could be shaping up. If this retest is seen followed with a break above its year-to-date high at 1.9143,the pair’s next target lies at 1.9218,its April’05 high with another resistance coming in at 1.9327,its Mar’05 high.Additionally,the weekly momentum remains positive supporting this view. .Conversely, if a failure is seen on a retest of Nov’06/YTD highs, GBP could face weakness at first towards 1.9003/8948, its Oct 27’06 high and Monday’s low followed with 1.8897/58,its Oct 03 & 20’06 highs. These levels are expected to curtail further downside price losses to preserve the pair’s short-term uptrend but a loss of this zone could change the odds for continued downside prices targeting 1.8671 with a break lower pushing the pair towards its Oct’06 highs at 1.8522/11.On the whole, as long as GBP remains above 1.8897/58 zone, its short term outlook remains to the upside.
Support Comments 1.9000/06 Psycho/level/broken trendline/.782 Ret 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
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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