EURUSD-EUR saw a second day of lower prices Tuesday following its recent gains accompanied by overbought studies on the daily chart. The pair maintains a positive tone suggesting that its current downside price losses are seen as corrective losses in reaction to overbought condition mentioned above. Downside targets on further corrections are seen at 1.3231/15, its .786 Ret/Nov 28&28’06 highs initially with a break extending losses towards 1.3126/1.3086 levels, its April’05 high/Nov 27’06 low. Beyond here, the next solid support comes in at 1.3000/1.2981,its Jun’06 high/psychological level,which is expected to hold and propel the pair higher preserving its recent break to the upside. On the upside, a break and close above its 20 months high at 1.3365 followed with a breach of 1.3405 level, its range breakout price target is needed to put EUR on the path to challenging its Mar’05 high at 1.3482 with a violation of this level putting the next target at 1.3667,its Dec’04 high. The monthly and weekly charts remain supportive of this view. Overall, EUR retains a positive upside bias as long as 1.3000/1.2981 levels hold.
. 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 Drifts Lower Nearer Term
GBPUSD-GBP pushed lower yesterday closing at 1.9731.This brings to two days of lower price losses following its recent high at 1.9848,the highest price seen in this pair since Sept’02.More downside losses could be seen nearer term as this is supported by overbought condition now persistent on the daily chart. If this scenario plays out, a test and break of 1.9635 level, its Dec 01’06 could occur paving the way for further price losses towards its Dec’04 high/horizontal support at 1.9552.This level as former resistance should now reverse roles as support and cause the resumption of the pair’s broader uptrend but if a loss of this zone materializes, it would put the pair in position to push prices lower aiming at its Mar’06 high/Nov 27’06 low at 1.9327/06 followed by its April’05/Nov’06 highs at 1.9218/1.9177.Technical levels on the upside are seen at 1.9849,its Nov’06 high with a decisive close above here required to run at its psychologically important level at 2.000 ahead of 2.0045/2.0110,its 1991/1992 highs. In addition, its longer-term charts remain positive suggesting that further upside price gains are expected. On the whole, GBP maintains its long term upside outlook and looks to resume its recent upside campaign after undergoing corrections/pullbacks.
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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