Week of October 27, 2008

EURUSD’s dramatic fall continues and has reached 1.2335 as of this writing.  In our August 21, 2008 EURUSD update, we said “as with the medium term trend, there is risk for a much deeper correction in the broad outlook with prices targeting 1.3054 in the months ahead, as a monthly open and close below 1.3054 will suggest prices will continue to move lower within a 1.1210-1.3054 consolidation zone before attempting another push to the upside.”  As of this writing, it appears that the risk for EURUSD is for a monthly close below 1.3054, and more imprtantly at this juncture, a monthly close below 1.2679 firmly suggest  prices will continue to move much lower with the November 2005 low at 1.1642 as the next objective.  As to the current fall from the September 22, 2008 high of 1.4866, only a monthly close above 1.3302 will take the pressure off the downside while 1.2335 holds, as prices will then move within a 1.3302-1.3899 consolidation zone before another attempt to the downside.  Intra day, the fall from the September 24, 2008 high at 1.3004 remains active and only a daily close above 1.2591 will take the intra day pressure off the downside while 1.2335 holds, as prices will then trade within a 1.2591-1.2748 consolidation zone before another attempt to the downside.

More updates later. RW