EURUSD-EUR did not only break above 1.3230 level, its .786 Ret of its 1.3667-1.1640 decline last week but broke to a 20-month high at 1.3365 increasing the possibility of an early challenge on its Dec’04 high at 1.3667.Its immediate upside tone remains firm as long as 1.3231/15 levels, its .786 Ret/Nov 28&28’06 highs are intact nearer term while 1.2981/1.3000 zone holds the key to the preservation of its longer term uptrend. Upside gains beyond its Friday high at 1.3365 are seen at 1.3405, representing its broader range breakout price target established by measuring the width of the range and projecting it from the breakout point (highlighted on the chart).A clear violation of this level should trigger further gains towards its Mar’05 high at 1.3484 with a decisive break and close above here required to challenge its Dec’04 high at 1.3667 and beyond. With persistent overbought condition on the daily chart resulting from its recent upside gains, EUR should experience some form of corrections nearer term to unwind that condition. Such weakness should see the pair target the 1.3231/15 levels, its .786 Ret/Nov 28&28’06 highs followed by 1.3126/1.3086 levels, its April’05 high/Nov 27’06 low where a break would pave the way for additional losses towards a stronger support zone at 1.3000/1.2981,its Jun’06 high/psychological level. On the whole,EUR maintains its upside bias and looks to push for higher prices towards 1.3667 in the days and weeks ahead.
Support Comments 1.3219/29 Nov 28’06 high/.786 Ret(1.3667-1.1640) 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
Resistance Comments 1.3405 Broader range breakout price target 1.3482 Mar’05 high 1.3667 Dec’04 high 1.4000 Psychological Resistance
GBP’s Uptrend Remains Intact
GBPUSD-Having overcome its year-to-date high at 1.9177 about two weeks ago,GBP has been on the offensive pushing through 1.9126,1.9327 and 1.9552(April’05,Mar’05 and Dec’04 highs) levels to set a 14-year high at 1.9848 last week. These levels, having lost their roles as resistance should now revert to support. The next important level seen on the upside in the course of the pair’s uptrend comes in at 2.000,its psychological resistance where a penetration and negation could set the stage for further gains towards 2.0045/2.0110,its 1991/1992 highs. In addition, its longer-term charts remain positive supporting this view. However, downside prices could be seen because of overbought condition, which is now a factor on the daily chart. Such a move will initially target its Dec 01’06 at 1.9635 ahead of its Dec’04 high/horizontal support at 1.9552, which is now expected to hold as support and propel the pair higher. If a failure at this level occurs, then its .382 Ret (1.8834-1.9848 rally)/Nov 29’06 at 1.9455/31 would be the next focus with a break extending losses towards its April’06 high/Nov 27’06 low at 1.9327/06.Overall,GBP has its eyes on 2.000 levels. With higher time frame charts heading higher, the pair should be on its way to test this important psychological resistance.
Support Comments 1.9635 Dec 01’06 low 1.9552 Dec’04 high 1.9327/06 Mar’05 high/Nov 27’06 low 1.9218 April’05 high
Resistance Comments 1.9848 Dec 01’06 high 2.000 Psychological Resistance 2.0045/2.0100 1991/92 highs 2.1447 .786 Ret(2.4519-1.0841)
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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