EURUSD-EUR shot to the upside on Tuesday extending its recent gains to a high of 1.3219 thereby maintaining its positive outlook. The upside pressure is coming on the heels of a break above its YTD high/psychological resistance at 1.2981/1.3000 last week. With this zone taken out and its April’05 high at 1.3126 broken, the pair should extend further gains towards 1.3219/20 levels, its Nov 28’06 high/.786 Ret (1.3667-1.1640 decline) with a penetration paving the way for a challenge on 1.3405 level, its broader range breakout price target ahead of 3482 level, its Mar’05 high. If a break and close above this level is seen, a retest and possible break of its Dec’04 high at 1.3667 and beyond could be seen. Additionally, EUR remains supported on its upside journey by its longer term studies which are positive. On the other hand, a loss of momentum in the form of negative divergence is now seen on the hourly and 4 hrs charts. Combining this with overbought condition displayed on the daily chart could suggest that downside losses should follow targeting its April’05 high at 1.3126 ahead of its Nov 27’06 low at 1.3086 with a loss of this level triggering further losses towards its Jun’06 high/psychological resistance at 1.2981/1.3000 where a halt is expected followed with higher gains. On a failure of this key support zone, the pair could face more weakness aiming at 1.2939/01 zone, its Aug’06/Nov 10’06 followed by another support seen at 1.2882/30, its LT broken falling trendline/Sept 22’06 high. On the whole, EUR’s uptrend remains intact and it looks poised to test higher prices in the days and weeks ahead.
. Support Comments 1.3126 April’05 high/Nov 27’06 low 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 1.3219/20 Nov 28’06 high/.786 Ret(1.3667-1.1640) 1.3405 Broader range breakout price target 1.3482 Mar’05 high 1.3667 Dec’04 high
GBP Extends Its Upside Gains
GBPUSD-After a lower close on Monday GBP made a run to the upside on Tuesday reversing Monday losses and making a new high at 1.9541, a few pips from its Dec’04 high at 1.9552.This important level looks vulnerable to being taken out on further attempts if the recent momentum on the longer-term charts remains positive. In such a case, a penetration and negation of this level would put the pair on the path for further upside gains towards 2.0110, its Sept’02 high. The higher timeframe momentum supports this view. On the downside, with overbought condition still a factor on the daily chart supported by a bearish divergence on the hourly chart, GBP could head lower aiming at 1.9327/06,its April’05 high /Nov 27’06 low to unwind this condition with a failure targeting 1.9218/1.9177,its Mar’05/Nov’06 highs/.50 Ret (its recent rally from 1.8837-1.9541).This zone is expected to hold and push the pair higher but a failure of this level would invalidate its recent breakout and puts further downside pressure on its Sept 25’06 high/LT falling trendline from Dec’04 at 1.9073/1.9067.Overall,GBP maintains a solid upside tone and should push higher possibly beyond 1.9552 level after digesting it recent upside gains.
Support Comments 1.9327/06 Mar’05 high/Nov 27’06 low 1.9218 April’05 high 1.9177 Nov 08’06 high 1.9073/67 Aug 31 & Sept 25 highs/LT trendline
Resistance Comments 1.9541/52 Nov 28’06/Dec’04 highs 2.0110 Sept’02 high 2.1447 .786 Ret(2.4519-1.0841) 2.4540 Nov’80 high
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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