EURUSD-After its Nov 10’06 high at 1.2901 and its subsequent failure forming a shooting star candle(highlighted in 11/13/06 analysis) on Friday,EUR followed through to the downside yesterday breaking below 1.2839/30 levels, its Sept 22’06/.786 Ret to make a low of 1.2795.The sell off has reversed the entire Friday gains suggesting that its short term uptrend is now stalling but a convincing break below 1.2765/47 zone, its Oct 03’06 high/Nov 08’06 low/.618 Ret will be required for a temporary top to be put in place with a further weakness expected towards 1.2690/79 levels, its Nov 03 & 06 lows. If a loss of this zone is seen, a stronger support lies at 1.2641/29, its Sept’06 lows and Oct 19’06 high. Momentum signals are mixed with weekly heading higher and daily pulling out of overbought condition resulting from its recent run to the upside.However,if EUR can push back above 1.2830/39 levels on closing basis, a retest of its Nov 10’06 high at 1.2901 is possible where a break if seen puts the pair in position to challenge its year-to-date high/psycho level at 1.2981/1.3000.A successful violation of this zone is needed for further gains towards 1.3126,its April’05 high ahead of 1.3482 level, its Mar’05 high. On the whole, EUR’s short term upside momentum has started waning therefore pressures on the downside may be building up if prices continue to fail ahead of its recent highs
Support Comments 1.2765/47 Oct 03’06 high/Nov 08’06 low/.618 Ret 1.2690/79 Nov 03 & 06 lows 1.2629/69 Sept’06 lows/Oct 02/04’06 lows 1.2560 July 26’06 low
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 Fails To Sustain Its Upside Gains
GBPUSD-GBP opened the week lower yesterday selling off below 1.9080/62 levels, its late Aug’06 high/LT broken falling trendline at the end of the day. With its failure to sustain its recent gains above 1.9135/43 zone, its Aug’06/Nov’01’06 highs, GBP looks vulnerable to the downside as long as the above-mentioned levels remain unbroken. On further weakness, the pair should push towards, its Nov 06’06 low at 1.8948 with a break below needed to confirm a temporary top. In such a case, GBP would now target 1.8897/58 levels, its Oct 03 & 20’06 highs enroute to its Oct 24’06 low at 1.8671.In addition, the daily studies have pulled out of overbought zone and are now pushing lower suggesting that further downside prices could be seen. Conversely, GBP could push for a retest of its Aug’06/Nov 10’06 high at 1.9143/77 if it can close back above 1.9062/80 levels, its late Aug’06 high/LT broken falling trendline.Further technical resistance levels above 1.9143/77 zone are seen at 1.9218,April’05 high followed by 1.9327,its Mar’05 high ahead of its Dec’04 high at 1.9552.In short,GBP remains under pressure as long as it mains below 1.9062/80 levels.
Support Comments 1.9002/8948 Oct 27’06 high/Nov 06’06 low 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 1.9080/62 Aug 31’06/LT broken trendline 1.9143/77 Aug’06/Nov’08 highs 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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