EURUSD-After selling off to a six-week low last week pushing through key support levels, EUR staged a mild corrective recovery on Monday closing at 1.3041 at the end of the day. This move could be a reaction to an oversold condition which is now a factor on the daily chart but as long as this recovery is contained by 1.3068/52 levels, its double top breakdown point/50 ema/Dec 18’06 low, the short term trend is to the downside. The first downside target is seen at its Jun’06 high/Jan’07 low/.618 Ret/psychological level at 1.3000/1.2973 where a decisive penetration and negation will pave the way for further losses towards 1.2901/24 levels, its Nov 10’06 high/.50 Ret (1.2484-1.3365 rally).A violation of here puts the next technical target at 1.2830/24, its Sept 22’06 high/.618 Ret with scope for price extension towards its Oct 03’06/Nov 17’06 highs at 1.2765/61.Its weekly momentum remains supportive of this view. On the upside, the cluster of resistance at 1.3052/68 levels, its double top breakdown point/50 ema/Dec 18’06 low is initially expected to capped upside gains and push the pair lower. Above here clears the way for upside gains towards its Dec 11’06 low/April’05 high at 1.3126/30 followed by its Dec 20’06 low/broken rising trendline/.786 Ret (1.3667-1.1640 decline) at 1.3221/45 ahead of 1.3292/95 levels, its Dec 12’06/Jan 02’07 highs and its Dec’06/20-month highs at 1.3365.On the whole, although a violation of the 1.3000/1.2973 levels will be needed to invalidate its Nov’06 breakout of a six-month range, the recent erosion of important support levels has made that view probable
Support
Comments
1.3000/1.2981
Psycho level/Jun’06 high
1.2901
Nov’10’06 high
1.2830/24
Sept 22’06 high/.618 Ret
1.2761
Nov 17’06 low
Resistance
Comments
1.3052/68
50 ema and Dec 18’06 low
1.3126/30
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
GBP Bounces Off Its MT Rising Trendline
GBPUSD-GBP saw a recovery yesterday bouncing off its MT rising trendline established since Oct’06 and closing at 1.9400, below its 50 ema/bottom of the range breakdown. This corrective move higher is coming on the heels of its recent sell off to a low of 1.9262.As long as these levels cap further upside gains, its short-term bias remains to the downside. Near term, oversold condition is displayed on the daily chart suggesting that yesterday’s bounce may be a response to that condition.GBP should push lower after unwinding this condition with the initial downside targets coming in at its .382 Ret/Mar’05 high at 1.9327/37 and 1.9272,its MT rising trendline before its April’05 high/Nov 10’06 high at 1.9218/1.9177.On a continued pressure, its .618 Ret (1.8522-1.9848 rally)/psychological level at1.9027/00 will be the next focus enroute to its Nov 17’06 low at 1.8834. On the upside, its 50 ema/Dec 18’06 low/range breakdown point at 1.9410/60 is seen as immediate ceiling followed by its Dec’04 high at 1.9552 where a break will set the stage for a run at its Dec 13&20’06/Jan 03’07 highs at 1.9727/50 ahead of its 14-year high at 1.9848 set in early Dec’06.On the whole, GBP remains vulnerable to further downside pressure as long as its remains below its ST range breakdown point.
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