EURUSD-EUR closed lower at 1.3146 after failing to push above its Nov 28’06 high at 1.3219 yesterday. The pair’s long term uptrend remains constructive but faces downside prices nearer term as its daily studies are heavily overbought accompanied by a diverging(bearish divergence) hourly chart(a situation where price rises are not confirmed by momentum indicators).As long as this persists and the 1.3219 level, its Nov 28’06 high remains unbroken,EUR remains pressured to the downside with a break of its April’05 high at 1.3126 and Nov 27’06 low at 1.3086 required to trigger further losses towards its Jun’06 high/psychological level at 1.3000/1.2981.This level is expected to hold and preserve its recent breakout of its six month range with a failure if seen, voiding that break. Further downside targets are seen at 1.2939/01 zone, its Aug’06/Nov 10’06 followed by 1.2882/30, its LT broken falling trendline/Sept 22’06 high. On the upside, its Nov 28’06 high/.786 Ret (1.3667-1.1640 decline) at 1.3219/29 is the immediate technical resistance. If a break is seen, then 1.3405 level, its broader range breakout price target is exposed with a loss of this level paving the way for a push towards its Mar’05 high at 3482.Overcoming this level will set the stage for a retest of its Dec’04 high at 1.3667 and possibly beyond. All in all, EUR’s upside outlook remains constructive as long as the key technical levels broken are still holding.
. 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 Focuses On Higher Level Prices
GBPUSD-GBP reversed some of its Tuesday gains and closed lower at 1.9457 on Wednesday. It however shot to the upside in late Asian session today pushing through its Nov 28 & 29’06 highs (1.9541/44) to hit a new high at 1.9562, the highest price seen since Sept’02.With its Dec’04 high at 1.9551 now vulnerable, its break could see the pair heading higher towards 2.0110, its Sept’02 high. This seems to be the logical target as no significant resistance level is seen before this target. Longer term studies remains supportive of this view. On the downside, with overbought condition and bearish hourly divergence still in place, further upside gains may be limited suggesting that lower level prices could be seen targeting 1.9327/06,its April’05 high /Nov 27’06 low followed by 1.9218/1.9177,its Mar’05/Nov’06 highs/.50 Ret (its recent rally from 1.8837-1.9541).A failure of this support zone(based on the roles it played in the past in holding upside incursions several times) is not expected but if it does happen, its Sept 25’06 high/LT falling trendline from Dec’04 at 1.9073/1.9067 would be exposed ahead of its Nov’6 & 9’06 lows at 1.8976/48.On the whole,GBP continues to maintain its positive tone and looks headed towards putting in a second month of higher 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 1.9541/62 Nov 28 & 30’06/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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