GBP/USD & EUR/USD
Fri, Nov 27 2009, 06:30 GMT
by Carol Harmer
GBP/USD
Cable failed ahead of 1.6740 and slammed lower for 1.6467. Now weakness has carried on overnight with Cable reaching lows of 1.6376. The market obviously is oversold on the hourly charts, but the dailies still show that the downside is not over yet, so you could see an initial bounce back to 1.6550/65 then this coming lower once more.
The 55 day moving average comes in at 1.6363 today and a loss then below 1.6350 would weaken the market further leading it lower to trendline support at 1.6317 coupled with the longer term 50% fib level of 1.6295. So this would be the band where sellers should look to take profits. This region of support is expected to hold initially, given the movement lower over the past two days, and buyers are expected to be out in force at these lows. Only a break of 1.6270 would put the buyers in jeopardy.
As stated there is scope from current levels to recover some of the declines posted. There is outside chance of 1.6550/65 being your short term objective. Buyers should cover to these highs and sellers should hold fast looking for a resumption of the downside moves. Only break above 1.6585 would see sellers question positions.
EUR/USD
Eur/Usd faltered again at 1.5145 and the subsequent decline has been vicious. Now there is support in the 1.4910/00 region and this may well be enough to hold the decline today. Short term charts are showing dangerously oversold levels and this may be enough to hold the market at these lows and prompt a corrective move higher. Back above 1.4960 would confirm and buyers would then feel safer taking this back to 1.4995/1.5020.
Here would expect sellers to be waiting and they will be looking to cap any further topside and keep a lid on this market. Only above 1.5020 would sellers wobble and let buyers take control for 1.5050/65.
Now if sellers get overexcited and break 1.4875 look for 1.4850/45 initially. However a break of 1.4875 would possibly have more longer term implications leaving the uptrend exposed at 1.4790/85. Sellers will take profits to here and buyers will also be at these lower levels looking to hold up the currency.
