In This Issue:

EURUSD: Upside Failure Highlights The 1.4262/16 Levels - The pair looks to build on its last week weakness after backing off higher...

GBPUSD: Holds Above The 1.6234/39 Levels With Caution - Immediate risk has turned to the upside having broken and held above its key overhead resistance at the 1.6234/39 levels, its Dec 31’09/Jan 04’10 highs...


EURUSD

EURUSD

EURUSD: Upside Failure Highlights The 1.4262/16 Levels.

EURUSD - The pair looks to build on its last week weakness after backing off higher prices ahead of the 1.4625 level, its Nov 03’09 low and breaking back below the 1.4446/79 levels. This development has increased further downside risk towards its psycho level at 1.4300 with a turn below there turning focus to the 1.4262 level, its Jan 08’10 level before its YTD low at 1.4216. This is our preferred bias which is consistent with its short term declines triggered off the 1.5143 level. Invalidating the 1.4216 level will resume its short term downtrend towards the 1.4176 level, its Sept 01’09 low with a break accelerating further downside weakness towards the 1.4044 level, its Aug 17’09 and subsequently its big psycho level at 1.4000.Its daily RSI is bearish and pointing lower suggesting further weakness. However, if EUR is able to hold off the current bears’ attacks and return above the 1.4446/79 area and then finally break and hold above the 1.4625 level, further upside threats could be seen towards the 1.4799 level, its Nov 20’09 high or even higher.


GBPUSD

GBPUSD

GBPUSD: Holds Above The 1.6234/39 Levels With Caution

GBPUSD - Immediate risk has turned to the upside having broken and held above its key overhead resistance at the 1.6234/39 levels, its Dec 31’09/Jan 04’10 highs. Though failing to follow through higher on the back of its Thursday strength on Friday, the caveat is as long as the pair holds above the 1.6234/39 levels, threats remain to the upside towards the 1.6409 level, its Dec 16’09 high where a cap may be seen thereby turning the pair lower. However, decisively violating that level will mean additional upside gains towards its Nov 25’09 high at 1.6744 and the 1.6875 level, its Nov 16’0-09 high ahead of its 2009 high at 1.7041 level. Its weekly RSI is bullish and pointing higher supporting this view.
Conversely, we are watching to see if the pair will follow through to the downside as we enter a new week and if it does by breaking below the 1.6234/39 levels, then we will reverse our upside view as further weakness should shape up towards its Jan 12’10 low at 1.6060. A clearance of there will pave the way for further downside losses towards its Dec 30’09 low at 1.5830 ahead of the 1.5706 level, its Oct 13’09 low where a sustained break will see a 100% price retracement (from 1.5706-1.6875 levels) and open the door for additional downside pressure towards its .50 Ret (1.3501-1.7041 rally) at 1.5273. This view is consistent with its short term downtrend activated from the 1.7041 level.