EURUSD-EUR followed through to the downside Thursday on the heels of the bullish engulfing candle pattern (yesterday’s analysis) formed on the daily chart on Wednesday. With a second day of its sell off seen combined with the daily studies which are negative and heading lower,EUR’s vulnerability to further downside price losses looks likely. In such a situation, the immediate downside target comes in at its April’05 high/Nov 27’06/Dec 11’06 high low at 1.3130/1.3086 with a successful violation shifting the focus to its Jun’06 high/psychological level at 1.3000/1.2981.In addition, the weekly RSI has turned lower supporting this view. On the upside, the next two technical levels are its .786 Ret/Nov 28’06 high at 1.3219/31 and its 20 months high at 1.3365 with a clearance putting the pair in position to push for higher prices towards its range breakout price target at 1.3405. Above here, the next resistance is its April’05 high at 1.3482 ahead of its Dec’04 high at 1.3667.Overall, EUR’s long-term trend is up but must maintain above 1.3000/1.2981 levels to keep that outlook intact.
Support Comments 1.3126/1.3086 April’05 high/Dec 08’06/Nov 27’06 lows 1.3000/1.2981 Psycho level/Jun’06 high 1.2901/39 Nov 10’06 high/Aug’06 high 1.2761 Nov 17’06 low
Resistance Comments 1.3219/31 Nov 28’06 high/.786 Ret(1.3667-1.1640) 1.3365 Dec’06 high 1.3405 Broader range breakout price target 1.3482 Mar’05 high
GBP Faces Further Downside Pressure
GBPUSD-GBP continues to weaken nearer term hitting a low of 1.9575 Wednesday following its Tuesday loss. With this current price action, it looks vulnerable to further downside pressure especially now that its daily RSI is pushing to the downside. The first downside target for such weakness is seen at its Dec’04 high at 1.9552 followed by its Dec 08’06 low/.382 Ret/Nov 29’06 low at 1.9465/34.A break of this level will signal more downside losses towards its Mar’06 high/Nov 27’06 low at 1.9327/06 where a break and close below this zone will set the stage for further price losses aiming at its April’05/Nov 10’06 highs at 1.9218/1.9177.This zone is expected to hold but if it fails, its upside outlook would be invalidated turning focus to the downside. On the upside, initial technical resistance is seen at its Dec 08’06 high at 1.9726 with scope for gains targeting its 14 years high at 1.9848 ahead of its psychologically important level at 2.000.Overcoming this level puts the next upside target at its 1991/1992 highs at 2.0045/2.0110.On the whole, as pressures to the downside continue to build up, it is expected that its Nov 10’06 high at 1.9177 should contain such weakness to preserve its long-term uptrend.
Support Comments 1.9552 Dec’04 high 1.9327/06 Mar’05 high/Nov 27’06 low 1.9218 April’05 high 1.9177 Nov 10’06 high
Resistance Comments 1.9726 Dec 08’06 1.9848 Dec 01’06 high 2.000 Psychological Resistance 2.0045/2.0100 1991/92 highs
Mohammed Isah Independent Analyst Exclusively for Spencer Financial LLC misah@spencerfx.com
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