EURUSD-EUR gained for the third day in a row yesterday breaking below 1.2924/01 levels, its Nov 10’06 high/.50 Ret (1.2484-1.3365 rally) to close at 1.2882.This is coming on the heels of an earlier violation of another significant support zone at 1.3000/1.2981,its.618/Ret/psycho level/ Jun’06 high on Wednesday. This development points to further downside pressure following the clearance of the above-mentioned levels putting the next downside target at its Sept 22’06 high/.618/double top price target at 1.2830/12.On a violation of these levels, the pair should push towardsits Oct 03’06/Nov 17’06 highs/rising trendline at 1.2765/36 with a break setting the stage for more losses aiming at its Nov 3&6’06 lows at 1.2690/79 ahead of its Oct 19’06 high/Sept 17’06 low at 1.2641/29.This view is supported by its weekly chart which is negative and trending lower.Conversely,the pair might experience a corrective bounce as oversold condition resulting from its recent downside losses can be seen on the daily chart .In such a situation, its .50 Ret (1.2484-1.3365 rally) at 1.2924 becomes the immediate upside target with a break clearing the way for gains towards its Jun’06 high/.618 Ret/psychological level at 1.3000/1.2981.This zone is expected to revert to resistance and contain any further upside incursions and send the pair lower. Beyond here if seen, puts the next upside barriers at its double top breakdown point/50 ema/Dec 18’06 low at 1.3052/68 and its Dec 11’06 low/April’05 high at 1.3126/30.On the whole, having broken below 1.3000/1.2981 levels and closed below 1.2924/01(Thursday), EUR has clearly invalidated its six-month range breakout seen in Nov’06 thereby threatening its long term uptrend
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 Fails Ahead Of 1.9462/1.952 Levels
GBPUSD-GBP headed higher yesterday unlike its EUR counterpart which took a nose-dive the same day. The pair however lost some of those earlier gains and closed below 1.9460/62 after testing a high of 1.9534.It needs a decisive break above its 50 ema/Dec 18’06 low/range breakdown point at 1.9460/62 followed with another close above 1.9552, its Dec’04 high to reduce the threat of further downside pressure. Holding above here(1.9552) puts the pair in position to stage a run towards its Dec 13&20’06/Jan 03’07 highs at 1.9727/50 and possibly its 14-year high at 1.9848 set in early Dec’06.Its daily studies are supportive of this view while its weekly momentum remains negative suggesting that further downside gains should follow after its present corrective gains. Initial downside target 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 successful close below these levels will trigger further losses towards its .618 Ret (1.8522-1.9848 rally)/psychological level at1.9027/00 and probably towards its Nov 17’06 low at 1.8834.On the whole,GBP remains vulnerable to the downside as long as it maintains below 1.9462/1.952 levels.
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