EURUSD-EUR followed through to the downside Thursday testing a low of 1.3073 and confirming the bearish engulfing candle pattern formation noted in our analysis yesterday. A violation of the 1.3052 level, its Dec 18’06 low will validate a double top pattern in place on the daily chart.EUR’s present weakness is coming on the heels of a failure at 1.3292/95 levels, its Dec 12’06/Jan 02’07 highs. The pair is now vulnerable to further downside losses in the days and weeks ahead with the immediate target seen at 1.3071/52 levels, its 50 ema/Dec 18’06 low. A loss of here opens the door for further weakness towards its Jun’06 high/.618 Ret/psychological level at 1.3000/1.2981.This level is significant and must hold to keep the pair’s upside campaign towards the resumption of its longer term uptrend, but if a break is seen, then the next target to aim at is its Nov 10’06 high at 1.2901.Its daily studies remain supportive of its present downside pressure. On the upside, its first target will be its Dec 11’06 low/April’05 high at 1.3126/30 followed by its broken short term rising trendline now at 1.3196.This is expected to reverse roles as resistance and push the pair lower but if that fails to happen, a move targeting its Dec 20’06 low/.786 Ret at 1.3231/45should follow before its Dec 12’06/Jan 02’07 highs at 1.3292/95.Its Dec 03’06 high and 1.3405, its range breakout price objective should be the next upside targets on further upside pressure. On the whole, EUR looks to push to the downside in the short term but must defend 1.3000/1.2981 to preserve its long term uptrend.
Support
Comments
1.3070/37
its 50 ema/Dec 18’06 low/.38 Ret
1.3000/1.2981
Psycho level/Jun’06 high
1.2901
Nov’10’06 high
1.2761
Nov 17’06 low
Resistance
Comments
1.3126/31
April’05 high/Dec 11’06
1.3231/45
.786 Ret(1.3667-1.1640)/ Dec 20’06 low
1.3292
Dec 12’06 high
1.3365
Dec’06 high
GBP Breaks Below Its ST Sideways Trading Range
GBPUSD-GBP has finallybroken and closed below its one-month ST sideways trading range putting the pattern’s price objective at 1.9193,a few pips before its Nov 10’06 high at 1.9177.This is established by measuring the width of the range and projecting it from the breakdown point. With that side, the pair looks weak to the downside seen from both price action and momentum indicators perspectives suggesting that a challenge on its .382 Ret/Mar’06 high/Nov 27’06 low at 1.9340/06 comes as its next target with a penetration triggering losses towards its April’05/Nov 10’06 highs at 1.9218/1.9177,a level that is expected to hold and put the pair on the path to resuming its longer term uptrend. Below here aims at 1.9027, its .618 Ret (1.8522-1.9848 rally).In addition, momentum indicators are negative and pushing to the downside. On the upside, its.382 Ret (1.8832-1.9848)/range bottom at 1.9460/62 serves as its initial resistance which should now revert to resistance after its erosion yesterday and increase further downside pressure. If however this zone gives way, its Dec’04 high at 1.9552 should contain further upside attacks with a break setting the stage for gains towards its ST range top/Dec 13&20’06 highs at 1.9727/48. On further upside pressure, its 14-year high at 1.9848 set in early Dec’06 comes as the next focus followed by its psychological resistance at 2.000.Overall, as long as GBP maintains above 1.9218/1.9177 zone, it should push for the resumption of its longer term uptren
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