Week of October 13, 2008

EURUSD reached 1.3258 last week, a few pips beyond the 1.3321 target mentioned in our August 21 update, as intraday studies suggest further upside potential towards 1.3660 as prices moved to 1.3623 in early Asian session today. Look for initial bids ahead the 38.2% of the intraday 1.3258-1.3623 rise, while to the downside, below 1.3414 will suggest prices will continue lower towards Friday’s 1.3258 low, as a sustained break targets our next objective at 1.3054. As to the fall from the September 22, 2008 high at 1.4866, only a daily open and close above 1.3872 will complete the fall, with prices then moving within a 1.3872-1.4252 consolidation zone before attempting another move to the downside.  As to the medium term fall from the July 15, 2008 all time high at 1.6037, only a daily open and close above 1.4320 will complete this fall while 1.3258 holds, as prices will then continue to move higher with 1.4648 as the next objective before attempting another move to the downside.  As to the broad outlook from the October 2000 low at 0.8227, the trend remains up as only a monthly open and close below 1.3054 will complete this rise at 1.6037, with prices then likely to move within a 1.1210-1.3054 zone before attempting another move to the upside. A daily close today above 1.3557 will suggest risk for further upside potential in the days ahead, whereas close below 1.3400 suggest further downside risk towards 1.3054.

GBPUSD medium term fall from the September 25, 2008 high at 1.8666 has reached 1.6761, well beyond our 1.7048 target mentioned in the August 18, 2008 update and shy of our next objective at 1.6539. Intraday prices have moved to 1.7159 in today’s early asian session with initial bids are likely ahead of the 38.2% of the 1.6791-1.7159 rise at 1.7056, with a sustained break below 1.6955 suggesting prices are likely to continue lower towards 1.6860 followed by 1.6761. To the upside, a 1 hour open and close above 1.7164 suggest prices will continue to move higher with 1.7252 and 1.7395 as the objectives.

More updates later. RW