Week of December 19, 2008

EURUSD’s active wave from the November 20, 2008 low of 1.2423 reached 1.4718 yesterday in what appears to be a medium term impulsive rally, as any correction to the downside should remain above 1.3300 so as to support this outlook.  A daily close below 1.3300 will eliminate the impulsive outlook and suggest a much broader correction of the 1.6037-1.2328 fall had unfolded with continued risk to the downside likely in the weeks and months ahead.  As to the current fall from yesterday’s 1.4718 high, a sustained move back above 1.4545 will confim the rise has once again resumed targeting yesterdays 1.4718 high followed by the September 22, 2008 high of 1.4866.  Intraday, look for initial offers ahead of 1.4060, whereas a sustained break of 1.4060 will suggeest further upside risk.

More updates later. RW