Week of February 23, 2009

EURUSD rallied late US session Friday reaching descending trendline resistance from the January 28, 2009 high which comes in at 1.2853 as of this writing.  A daily open and close above 1.2824 will see prices continue to move intially towards 1.3016.  As to the medium term fall from the December 18, 2008 high of 1.4718, ONLY a weekly close above 1.3355 will complete the medium term fall at the February 18, 2009 low of 1.2512, with prices then moving within a 1.3355-1.3875 consolidation zone before another attempt to the downside. The broad outlook favors further downside risk as a monthly close below 1.2689 confirms prices will continue to move lower with the November 2005 low of 1.1642 as the next objective.

GBPUSD intraday risk remains to the upside with 1.4644 as the next objective while a daily open and close above this level will see further upside extension towards 1.4789 followed by the February 2009 high of 1.4984. As to the downside, a daily open and close below 1.4246 will see further downside extension towards 1.4033 and beyond.  As to the broad outlook, risk clearly remains to the downside with a monthly close below 1.3952 confirming prices will continue to move lower with 1.2825 as the next objective and eventually the 1985 low 1.0345. However, a monthly close above 1.4539 favors favors further upside correction before another attempt to the downside.

More updates later. RW