EURUSD-EUR sold off yesterday clearing its Jun’06 high/.618 Ret/psychological level at 1.3000/1.2981 and hitting a 2007 low at 1.2927.Judging from the clearance of these key support levels,EUR has broken back into its six months trading range it overcame in Nov’06 suggesting that a move towards its next technical support which now lies at 1.2901/24, its Nov 10’06 high/.50 Ret (1.2484-1.3365 rally) is expected with a break paving the way for further losses aiming at its Sept 22’06 high/.618/double top price target at 1.2830/12.If a loss of this zone is seen, then its Oct 03’06/Nov 17’06 highs at 1.2765/61 will be targeted ahead of its Nov 3&6’06 lows at 1.2690/79.Daily studies remain oversold while the weekly indicators are negative and continue to push lower. The action of the former implies that a corrective bounce might occur to unwind this condition (oversold).In such a situation, clearing of its Jun’06 high/.618 Ret/psychological level at 1.2981/1.3000 followed by its double top breakdown point/50 ema/Dec 18’06 low at 1.3052/68 on the upside should put the pair in position to challenge its Dec 11’06 low/April’05 high at 1.3126/30.On a successful penetration of here, the pair should run at its Dec 20’06 low/broken rising trendline/.786 Ret (1.3667-1.1640 decline) at 1.3221/45 before 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, with the loss of 1.3000/1.2981 zone,EUR is expected to face further weakness in the days and weeks ahead.
Support
Comments
1.2901
Nov’10’06 high
1.2830/24
Sept 22’06 high/.618 Ret
1.2761
Nov 17’06 low
1.2690/79
Nov 3&6’06 lows
Resistance
Comments
1.3000/1.2981
Jun’06 high/.618 Ret/psychological level
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
GBP’s Outlook Points Lower In The Short
GBPUSD-Following a bounce off 1.9460/62 levels and the subsequent formation of a shooting star candle pattern on Tuesday, GBP sold off to a low of 1.9316 yesterday supporting the downside pressure it has been witnessing since the beginning of 2007,after closing 2006 on a positive note with a 14-year high at 1.9848.The pair has lost about 584 pips since hitting that high in Nov’06 and from what the charts are showing more losses could follow in the days and weeks ahead. The immediate target on such losses comes in at its .382 Ret/Mar’05 high at 1.9327/37 followed by its MT rising trendline(established since Oct’06)/ Jan’07 low at 1.9293/62 ahead of its April’05 high/Nov 10’06 high at 1.9218/1.9177.A decisive violation of these levels will set the stage for further losses towards its .618 Ret (1.8522-1.9848 rally)/psychological level at1.9027/00 with scope for extension targeting its Nov 17’06 low at 1.8834.Its weekly momentum indicators are supportive of this view. On the upside, with oversold condition displayed by stochastics on the daily chart, a corrective bounce to ease this condition might follow putting the first resistance level at its 50 ema/Dec 18’06 low/range breakdown point at 1.9410/62 ahead of 1.9552, its Dec’04 highand its Dec 13&20’06/Jan 03’07 highs at 1.9727/50 where a clearance would push the pair towards its 14-year high at 1.9848 set in early Dec’06.On the whole,GBP remains pressured to the downside as long as the1.9460/1.9552 levels stay unbroken.
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