EURUSD-EUR extended its run to the upside on Friday breaking above its YTD high/psychological resistance at 1.2981/1.3000 and closing above its six trading range, the highest price since April 24’05. This has now put the pair on the path to resuming its primary uptrend on hold since Jun’06 and has opened the door for upside gains targeting 1.3126 level, April’06 high with scope for price extension towards 1.3405,representing broader range breakout price target established by measuring the width of the range and projecting it from the breakout point (highlighted on the chart in our weekly analysis).Clearing of this level should push the pair higher towards 1.3482, its Mar’05 high ahead of its Dec’04 high at 1.3667.This view is supported by its longer term studies which are positive and pointing higher.However,weakness resulting from recent upside gains as seen in the price action and daily studies could push the pair lower aiming at 1.3000/1.2981 zone, its Jun’06 high/psychological resistance. This zone is expected to reverse roles as support and preserve the breakout but a failure to do that would push the pair back into the range targeting 1.2939/01 zone, its Aug’06/Nov 10’06 highs before its LT broken falling trendline/Sept 22’06 high at 1.2882/30.On the whole, having broken decisively above its broader range, EUR should see further upside gains in the days and weeks ahead.
Support Comments 1.2981/1.3000 Year-to-date high/psycho level 1.2901/39 Nov 10’06 high/Aug’06 high 1.2888/30 Sept 22’06 high/Broken LT falling trendline 1.2774/47 Oct 03’06 high/Nov 08,15,17 lows
Resistance Comments 1.3126 April’05 high 1.3405 Broader range breakout price target 1.3482 Mar’05 high 1.3667 Dec’04 high
GBP Takes Out Its Year-To-Date High
GBPUSD-GBP shot to an almost two-year high of 1.9350 on Friday clearing its YTD high at 1.9177, 1.9218 level, its April’05 high and testing its Mar’05 high at 1.9327.Further upside prices are expected as this new development has triggered the resumption of its original uptrend and awakened the possibility of a retest of its Dec’04 all time high at 1.9552. The levels on the upside remain 1.9350/27 which requires a decisive break to put pressure on the 1.9552 level ahead of 2.0110,its Sept’02 high.GBP’s upside tone is supported by its weekly studies. On the other hand, overbought condition has set in which could cause the pair to weaken or consolidate. In such a case, the pair could push to the downside towards its April’05 high at 1.9218 initially with a break targeting 1.9177/43, its Aug’06/Nov’06 highs, which should now revert to support and push the pair to the upside. If a break of this zone is seen, it will invalidate Friday’s breakout and put pressure on the downside towards its Sept 25’06 high/LT falling trendline from Dec’04 at 1.9073/1.9067 ahead of its Nov’6 & 9’06 lows at 1.8976/48.All in all, the loss of 1.9143/77 zone has put GBP on the pathway to further upside gains aiming at 1.9552 and possibly beyond.
Support Comments 1.9218 April’05 high 1.9177 Nov 08’06 high 1.9073/67 Aug 31 & Sept 25 highs/LT trendline 1.8948/76 Nov 6 & 9’06 lows/Nov 17’high
Resistance Comments 1.9327 Mar’05 high 1.9552 Dec’04 high 2.0110 Sept’02 high 2.1447 .786 Ret(2.4519-1.0841)
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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