Directional Bias:
Nearer Term –Bearish
Short Term –Bearish
Medium Term –Bearish

Formation Of A Shooting Star Candle To Trigger Further Downside Weakness

EURUSD - With the pair’s break out of a triangle and its rise off the 1.2423 level cut short after failing to push through its Nov 25’08 high at 1.3081,it has formed a shooting star candle pattern(top reversal signal) and increased the chances of further downside losses. We now see that decline targeting the 1.2423 level ahead of its strong support residing at the 1.2330 level which also combines as its range bottom.

Penetrating and negating there will open the door for lower prices towards the 1.2134 level, its .50 Ret (its 0.8231-1.6038 high, monthly chart) and then the 1.1827 level, its Mar’06 low. Its daily studies continue to trend lower suggesting further declines.

Conversely,in order for the pair to reduce the present downside threat a close above the 1.3081 level is required to signal more upside gains towards the 1.3259/98 level, its Oct 30’08 high/Oct 10’08 low. This zone and the 1.2330 level remain the trigger for any meaningful directional moves either way. On the whole, with upside failure seen, EUR should now aim at its range bottom/YTD low at 1.2330 and beyond.

Directional Bias:
Nearer Term – Bearish
Short Term – Bearish
Medium Term – Bearish

Triangle Break Expected To Resolve To The Downside

EURUSD-As range trading dominates price action between the 1.2330 and 1.3298 levels, the symmetrical triangle formed within that range is expected to resolve to the downside. This is based on the fact that the pair’s primary trend is down and the present range activities are coming on the heels of a decline off the 1.6038 high. We see a decisive break and hold below the 1.2330 level activating further weakness towards the 1.2134 level, its .50 Ret (its 0.8231-1.6038 high, monthly chart) and the 1.1827 level, its Mar’06 low.

Daily studies are supportive of this view as they are trending lower.Conversely,if a follow-through to the upside on Friday’s reversal were to occur, its Nov 19’08 high at 1.2814 will be aimed at before its Nov 10’08 high at 1.2927.Other resistance levels are seen at the 1.3116 level, its Nov 05’08 high and then the 1.3259/98 level, its Oct 30’08 high/Oct 10’08 low .On the whole, a break of the latter or the 1.2330 level will be required to create meaningful directional moves.

Directional Bias:
Nearer Term –Mixed
Short Term –Bearish
Medium Term –Bearish

URUSD - Range trading and consolidative price activities are set to dominate EUR nearer term as a failure ahead of the 1.2330 level, representing its YTD low has now pushed the pair into a sideways trading range. This is coming on the back of a break out to the downside from its 4 hourly symmetrical triangle the past week.

With that said, EUR must break either way through the 1.3298 or the 1.2330 level to establish directional moves but based on our model trend and EUR’S medium term trend which are both down, we expect the pair to come out of consolidation breaking below the 1.2330 level. In such a case, the 1.2134 level, its .50 Ret (its 0.8231-1.6038 high, monthly chart) and the 1.1827 level, its Mar’06 low will be aimed at.

On the upside, continued strength within the range will call for a move towards the 1.3058/05 level, its Oct 23’06 high/.618 Ret (0.8231-1.6038 rally, monthly chart) ahead of the 1.3259/98 level, its Oct 30’08 high/Oct 10’08 low and next the 1.3666 level, its Dec’04 high. On the whole, while the pair’s MT trend remains lower, breaking out of the range remains a challenge in the near term.