Week of January 22, 2009

EURUSD fall from the December 18, 2008 high of 1.4718 remains active as ONLY a daily open and close above 1.3548 will complete this fall at 1.2824, with prices then continuing to move higher within a 1.3598-1.3994 consolidation zone before another attempt to the downside.  However, a daily close above 1.3085 today will see prices continue to move higher in the near term with 1.3104 and 1.3171 as the next objectives, otherwise, downside risk remains.   As to the downside, prices are presently consolidating this weeks 1.3385-1.2824 fall, as a 1 hour open and close above 1.3038 will complete the short term fall from 1.3385 at 1.2824, with prices subsequently moving within a 1.3038-1.3171 consolidation zone before another attempt to the downside, while a 1 hour open and close below 1.2923 will see furher downside momentum.

GBPUSD reached 1.3620 yesterday, 62 pips below our 1.3682 target sited in our August 26, 2008 outlook (Please read our August 26 update).  The broad outlook remains to the downside for GBPUSD, as ONLY a monthly open and close above 1.5548 will complete the fall from the September 25, 2008 high of 1.8666, with prices then moving within an 1.5548-1.6738 consolidation zone before another attempt to the downside. As to the fall from the January 16, 2009 high of 1.4979, ONLY  daily open and close above 1.4139 will complete this fall while 1.3620 holds, as prices will then continue to correct higher within a 1.4139-1.4468 consolidation zone before another attempt to the downside.

Stepping back and taking a look at the multi-year pattern of GBPUSD, the current move to the downside from the July 2008 high of 2.0155 is merely a resumption of the 2.4465-1.0345 (1980-1985) fall, as subsequent to that fall, prices have been essentially consolidating within the 1.5739-1.9071 multi-year consolidation zone, as risk remains for much further downside with a Yearly open and close below 1.3880 confirming further downside risk with 1.0345 as the objective.

January Outlook

Now, as to the present intra-day trading environment, low risk trade opportunities have been few in the past 2 weeks as the present  week has been no different.  What is occurring right now are short term moves which fail to sustain, with prices reversing intra day trends established in prior sessions.  From July 15 -November 15 2008, there was a very strong trend providing favorable intra day and medium term trade opportunities as the intra day trends were well sustained throughtout the Asia, Europe and American sessions.