EURUSD-EUR stalled ahead of 1.2901 level (its Nov’06 high) yesterday and subsequently collapsed to a low of 1.2806 before closing at 1.2814.The pair had earlier failed ahead of its year-to-date high at 1.2981 in Nov 11’06 following a loss of momentum. Yesterday’s failure has invalidated the efficacy of the bullish engulfing pattern formed on the daily chart on Friday last week and has reinforced the significance of the 1.2830/1.2901 levels, opening the door for a challenge on the 1.2690/79 levels, its Nov 03 & 06 lows. Breaking this zone would put EUR in position to push towards its Sept’06 lows at 1.2641/29 zone with a decisive break required to turn the focus on the 1.2488/59 levels, its Oct’06/July’06 lows. On the upside,1.2830/1.2901 zone remains a solid resistance to be taken out ahead of its year-to-date/psychological resistance at 1.2981/1.3000.If the bulls overcome this important zone, higher level prices towards its April’05 high at 1.3126 and its Mar’05 high at 1.3482 should follow. Daily studies remain neutral while weekly studies are pointing higher supporting the latter scenario (upside).On the whole, EUR should head lower after failing ahead of its Nov’06 high at 1.2901 yesterday. A break above this level invalidates its short-term downtrend bias.
Support Comments 1.2774/47 Oct 03’06 high/Nov 08,15,17 lows/.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 1.2830/1.2901 Sept 22’06 high/.786 Ret/Nov’06 high 1.2981 Year-to-date high 1.3126 April’05 high 1.3482 Mar’05 high
GBP Still In Its Corrective Mode
GBPUSD-GBP continued with its correction yesterday clearing the 1.8948 level, its Nov 06’06 low to open the week on a positive note. Nearer term, this is constructive but a break and close above its long term (LT) falling trendline/Aug 31’06 high at 1.9069/88 is required to put pressures on its Aug’06/Nov’06 highs at 1.9143/77 with a break if seen, targeting its April’05 high at 1.9218 ahead of its Mar’05 at 1.9327.Beyond this level, its Dec’04 high at 1.9552 is the next target.Monentum indicators are positive supporting this corrective move. On the downside, its Nov 06’06 at 1.8948 is the immediate target followed by 1.8858/34 levels, its Oct 20’06 high/Nov 15 & 17 lows and 1.8777, its 4hrs rectangle price objective before its LT rising trendline/Oct 24’06 low at 1.8671/61.On the whole, GBP still maintains its corrective tone but should head lower after unwinding this condition (oversold)
Support Comments 1.8948/65 Nov 06’06 low/Nov 17’high 1.8858/34 .618 Ret/Oct 20’06 high/Nov 15&17 lows 1.8777/33 Rectangle pricetarget/Oct 17&18’06 highs 1.8671 Oct 24’06 low/LT rising trendline
Resistance Comments 1.9088/67 Aug 31’06/LT falling 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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