EURUSD-EUR continues to challenge 1.2830/39 levels as it was seen testing above 1.2800 level yesterday but failed to hold above it and closed lower at the end of the day confirming its loss of momentum at higher level prices as evidenced by its Tuesday price action which also failed ahead of 1.2830/39 levels, its Sept 22’06 high and .786 Ret of its Aug-Oct decline. This is supported by negative RSI divergence on the 4hrs chart(yesterday’s analysis).Although EUR remains above 1.2750,its Oct 27’07 high which is positive for its current short term uptrend, as long as 1.2830/39 remains intact and unbroken the journey to the downside can not be ruled out. If such downside move materializes, support levels are seen at 1.2750(Oct 27’06 high) followed by 12679/76, its Oct 31’06/Nov 03’06 lows/short term range bottom ahead of a strong support zone at 1.2641/29, its Sept’06 lows with a loss of this zone targeting 1.2488/82,its Oct’06 lows.Conversely,a break and closed above 1.2830/39 zone invalidates this downside scenario and puts the pair in position to push for a retest of its year-to-date high at 1.2981 set in Jun’06.Weekly momentum remains in support of this view. Other overhead resistance levels lie at 1.3126, its April’06 high ahead of another key resistance seen at 1.3482, Mar’05 high. On the whole, EUR remains sandwiched between 1.2830 and 1.2679, its short term trading range, a break of this range is needed to set a stage for short term directional moves within its six months broader range
Support Comments 1.2709/10 100 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 1.2830/39 Sept 22’06 high/.786 Ret 1.2981 Year-to-date high 1.3126 April’05 high 1.3482 Mar’05 high
GBP Loses Another Attempt at Higher Level Prices
GBPUSD-Following its Tuesday unsuccessful attempts at the 1.9100/43 levels, GBP put up another challenge at retesting its Nov 07’06 high at 1.9123 yesterday but failed closing at 1.9048.In order for this pair to resume its primary uptrend halted since June this year, the 1.9135/43 zone, its Nov’06 and Aug’06 highs must give way for such continuation to be possible. On a sustained penetration and close above these levels 1.9218 its April’05 high comes in as the next resistance level ahead of 1.9327,its Mar’05 high with a break of this level exposing its Dec’04 high at 1.9552.Additionally,the weekly studies are positive supporting this view. Although this scenario is technically supported by the fact that the pair’s longer term trend is up therefore a pause in the cause of such uptrend should break in the direction of the main trend, its past failures in August,Sept and recently last week and on Tuesday this week should warn market participants that downside risk is possible. In such a case, Support levels are seen at 1.9002/1.8948,its broken short-term falling trendline/Oct 27’06 high and Nov 06’06 low with a break pushing the pair towards 1.8897/58 levels, its Oct 03 & 20’06 highs. Further out, its Oct 24’06 low at 1.8671 is another key level ahead of its Oct’06 lows at 1.8522/11.On the whole, 1.9135/43 levels must be overcome if any meaningful upside directional move is to occur in this pair.
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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