EURUSD-Following a break above its Jun’06 high/psychological resistance at 1.2981/1.3000 and a close above its six months trading range last week, EUR digested that move and closed lower yesterday. The pair remains threatened nearer term by yesterday’s price failure to push above its latest high at 1.3163 and overbought condition displayed on the daily chart. This suggests that correction/pullback to unwind this situation could trigger downside losses towards 1.3000/1.2981 zone, its Jun’06 high/psychological resistance and 1.2939/01 zone, its Aug’06/Nov 10’06 highs with a break invalidating its recent break to a 20-month high. Such a breach should push it lower towards a stronger support at 1.2882/30, its LT broken falling trendline/Sept 22’06 high. Upside targets are seen at 1.3163/1.3208,its recent high/.786 Ret(1.3667-1.1640 decline) and 1.3405 level, representing broader range breakout price target established by measuring the width of the range and projecting it from the breakout point. If this level gives way, an extension of price towards 3482 level, its Mar’05 high could be seen ahead of its Dec’04 high at 1.3667.On the whole, EUR’s upside tone remains intact as long as it holds above 1.2981/1.3000 levels.
Support
Comments
1.3126
April’05 high
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
Resistance
Comments
1.3405
Broader range breakout price target
1.3482
Mar’05 high
1.3667
Dec’04 high
1.4520
April’95 high
GBP Maintains Its Upside Tone
GBPUSD-GBP opened the week lower closing at 1.9378 yesterday, the first lower close seen since its run to the upside began last week. The pair is still holding on its recent gains and was seen testing higher prices at 1.9460 in early morning trading suggesting that its journey to 1.9552 levels, its Dec’04 high might be faster than expected. Overcoming this level puts the pair in position to push for higher prices towards 2.0110, its Sept’02 high. This view is supported by the higher timeframe momentum. Although GBP’s longer-term uptrend is up, nearer term its daily momentum indicators are overbought implying that prices might reverse or consolidate to ease the condition before further upside attacks. In such a situation, downside target is seen at 1.9327,its Mar’05 high followed by 1.9218,its April’05 highwith a break triggering losses towards 1.9177/43, its Aug’06/Nov’06 highs, which is expected to hold and push the pair higher. A failure of this level invalidates its recent breakout and calls for downside pressure targeting 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.On the whole, the pair’s uptrend remains solid as it is now eyeing the 1.9552 level.
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