EURUSD: Rejection Candle To Set Off Corrective Recovery Higher - The pair’s failure to follow through to the downside on the break of the 1.2551 level, its Dec 04’08 has seen it rallied for two days and printed a rejection candle at the end of the week…

GBPUSD: Barrier To Further Downside Weakness Seen At The 1.4137 Level - With the inability of the pair to break and close below the 1.4137 level, its Feb 12’09 low pushing it back into a positive weekly close territory, its Feb 13’09 high(daily chart) at 1.4605 will now be targeted having closed above the 1.4352 level, its Dec 31’08 low on Friday …

EURUSD- The pair’s failure to follow through to the downside on the break of the 1.2551 level, its Dec 04’08 has seen it rallied for two days and printed a rejection candle at the end of the week. This development suggests a price follow through higher could occur with targets located at its Feb 04’09/Nov 25’08 highs at 1.3071/81 ahead of the 1.3298/1.3313 zone, its Jan 06’09 low/Oct 30’08 high. Although this level is expected to hold and turn the pair lower again, continued failure at its Jan 23’09/Feb 02’09 lows at 1.2706/66 could pose a danger to that level as a break of there will push the pair higher towards its Jan 12’09 high at 1.3477.Its daily studies have turned higher suggesting further strength. On the downside, the 1.2706/66 area will serve as the initial support followed by its Dec 04’08/Feb 18’09 lows at 1.2551/14 and next its 2008 swing low at 1.2330.On the whole, with another failure at the 1.2706/66 area seen again preventing a weekly close below that zone, EUR is likely to correct higher in the days and weeks ahead.

GBPUSD- With the inability of the pair to break and close below the 1.4137 level, its Feb 12’09 low pushing it back into a positive weekly close territory, its Feb 13’09 high(daily chart) at 1.4605 will now be targeted having closed above the 1.4352 level, its Dec 31’08 low on Friday. The next upside target on continued offensives lies at its Jan 16’09/Feb 09’09 highs at 1.4981/86.A cap is expected at this level to turn the pair lower but if that fails to materialize, further gains could be seen towards the 1.5374 level, its Jan 08’09 high where another ceiling is likely or even the 1.5484 level, representing its .382 Ret of its 1.8669 to 1.3504 decline. Its weekly RSI remains supportive of this view as it is heading higher.Alternatively,if the pair eventually breaks below the 1.4137 level, lower prices should ensue towards its Feb 02’09/Jan’2002 low at 1.4045 with a loss of there paving the way for a decline towards the 1.3682 level, its Jun’2001 low and then its YTD low at 1.3504.We retain our view that the latter level could traded once 1.4137 and 1.4045 level are taken out. All in all, while the pair’s overall broader bias remains to the downside, an end to its current correction is required to resume that trend.