EURUSD-EUR made a run to the upside hitting a high of 1.2819 on Tuesday and subsequently failed ahead of 1.2830/39 levels, its Sept 22’06 high and .786 Ret of its Aug-Oct decline. This brings to two times in row it failed above these levels since the beginning of Nov.implying how significant this zone is to its current short-term uptrend which began off its Oct’06 lows(1.2482/88) three weeks ago. The 1.2830/39 levels remain pivotal to its short term upside outlook with a break and close above these levels required to increase its chances of retesting its year-to-date high at 1.2981.A successful breach of 1.2981/13000 zone could trigger higher price gains towards 1.3126,its April’06 high followed by another key resistance seen at 1.3482,Mar’05 high. The weekly studies remain positive supporting this view. However, this new failure at high-level prices, which coincided with a loss of momentum in the form of a negative divergence on the 4hrs chart should see this pair push lower towards its Oct 27’06 high at 1.2750 with a failure targeting 1.2679/76 levels, its Oct 31’06/Nov 03’06 lows/short term range bottom ahead of a significant support zone at 1.2641/29, its Sept’06 lows. A loss of these levesl is needed to invalidate EUR’s current short-term uptrend paving the way for further weakness towards its Oct’06 lows at 1.2488/82.On the whole, EUR remains limited to its short-term trading range between 1.2679 and 1.2830 within its broader range in place since June this year.
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 Continues To Trade Below 1.9100/43 Zone
GBPUSD-GBP also followed suit by rallying to a high of 1.9123 failing ahead of 1.9135/43 levels, its Nov’06 and Aug’06 highs thereby reinforcing the importance this zone. Until a successful break and close above this zone is seen, GBP risks downside price losses, which is now supported by a loss of momentum exhibited by higher candle shadows indicating rejection of higher price gains. In such a case the next target to shoot for should be 1.9003/1.8948,its broken short-term falling trendline/Oct 27’06 high and Nov 06’06 low. On a break of these levels, a penetration and close below 1.8897/58 levels, its Oct 03 & 20’06 highs will be required to put the pair on the path to retesting its Oct 24’06 low at 1.8671 ahead if its Oct’06 lows at 1.8522/11.On the upside, its Aug’06/Nov’06 highs remain key resistance targets to be breached in order for a meaningful directional move to occur which if seen brings 1.9218,its April high into focus ahead 1.9327,its Mar’06 high. Overall, GBP’s short term trend remains to the upside as long as 1.8897/58 zone is holding with a break above the 1.9135/43 levels needed to resume its primary uptrend.
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 1.9088/1.9143 Aug’06 & Nov’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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