EURUSD-EUR continues to trade below 1.2830/1.2901 levels, its Sept 22’06 and Nov’06 highs pushing to a low of 1.2774 yesterday. This current weakness is coming on the heels of a loss of upside momentum seen above the aforementioned levels last week. Daily studies are pointing to the downside suggesting that more weakness is possible in the days ahead. Such a move should target towards 1.2765/47 zone, its Oct 03’06 high/Nov 08’06 low/.618 Ret ahead of a stronger support which lies at 1.2690/79 levels, its Nov 03 & 06 lows with a break paving the way for a move towards 1.2641/29 zone, its Sept’06 lows and Oct 19’06 high. Further downside prices could be seen extending towards Oct’06 lows at 1.2488/82 if its 1.2641/29 zone is overcome. On the upside, a violation of the 1.2830/1.2901 levels, its Sept 22’06 high, .786 Ret and Nov’06 high will be required to put EUR on the pathway to challenge its year-to-date high/psycho level at 12981/1.3000.If the pair can overcome these hurdles, more upside gains could be triggered towards 1.3126 level, its April’05 high ahead of 1.3482 level, its Mar’05 high. On the whole, EUR remains trapped in a six-month range but as long as it remains below 1.2830/1.2901 levels, downside pressures should persist with lower levels prices expected.
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 Finally Breaks Below 18950 Levels
GBPUSD-GBP has given back all of its last week’s gains selling off to a low of 1.8837 and breaking below its Nov 06’06 low at 1.8948 to confirm an interim top yesterday. This downside weakness also coincided with a breakout of a 4hrs rectangle pattern(a series of sideways price fluctuations bounded on both the upside and downside by horizontal lines) in place since late Oct’06.The price objective of this pattern comes in at 1.8777 established by measuring the width of the range and projecting it from the breakdown point. The current sell off began last week after GBP failed to hold above 1.9143/77 resistance levels. With price action still poised to head lower and momentum negative, the pair should challenge 1.8858 level, its Oct 20’06 high with a break needed to set the stage for a push towards its LT rising trendline/Oct 24’06 low at 1.8671/61.A loss of this level could extend downside losses targeting 1.8522/11 zone, its Oct’06 lows. On the other hand, any strength should be contained by 1.8948 level, its Nov 06’06 low which should now revert to resistance having lost its support roles. A sustained break above this level if seen should see the pair pushing towards its short term (ST) broken rising trendline/late Aug’06 high at 1.9067/88 with a successful breach targeting 1.9143/77 zone, its Aug’06/Nov’06 and possibly towards its April’05 at 1.9218 before its Mar’05 at 1.9327.On the whole,GBP remains vulnerable to the downside as long as 1.8948 level holds.
Support Comments 1.8858 .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 1.8948 Nov 06’06 low 1.9088/67 Aug 31’06/ST broken trendline 1.9143/77 Aug’06/Nov’08 highs 1.9218 April’05 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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