Week of December 1, 2008

EURUSD remains in a consolidation phase since reaching the 1.2328 low on  October 28, 2008 with daily trendline support coming in at 1.2445 as of this writing,  No change in the medium term outlook as ONLY a daily open and close above 1.3298 will complete the fall from the September 22, 2008 high at 1.4866 while 1.2328 holds, as prices will then move within a 1.3298-1.3896 consolidation zone before attempting another move to the downside.  As to the intraday outlook,  prices remain within a 1.2620-1.2700 range as a sustained break of this range, such a as 15 minute open and close outside this range will see further intraday extension in the direction of the break, with 1.2748 as the initial upside intraday target, while 1.2565 as the initial downside intraday target.

GBPUSD reached a low of 1.4557 in November, below our 1.5282 target but still short of our 1.3682 objective.  The broad term risk remains to the downside while prices hold below 1.6127, however, a daily open and close above 1.6127 will complete the fall from the September 25, 2008 high at 1.8666 while 1.4557 holds, as prices will then move within a 1.6127-1.7096 consolidation zone before another attempt to the downside.  Intraday, a daily  open and close below 1.5215 will complete the short term rise from the  November 21, 2008 low at 1.4699, with prices then moving within a 1.5018-1.5215 consolidation zone before attempting another push to the upside.  However, a daily close above 1.5324 will see further extension to the upside initially targeting 1.5461 followed by 1.5534, while to the downside a daily close below 1.5018 will see further downside risk toward 1.4878.

More updates later. RW