Week of March 10, 2009

EURUSD’s short term fall from the Februry 23, 2009 high of 1.2990 remains active as only a 2 hour open and close above 1.2659 will complete the fall while the March 4, 2009 low of 1.2455 holds, as prices will then move within a 1.2659-1.2786 consolidation zone before another attempt to the downside. Once prices have sustained above 1.2659, then a break of the above mentioned consolidation zone will see further price extension in the direction of the break with 1.2589 as the initial downside target while 1.2876 as the initial upside target. Regarding the medium term fall from the December 18, 2008 high of 1.4718, this wave remains active as ONLY a daily open and close above 1.3319 will complete this fall while the March 4, 2009 low of 1.2455 holds, as prices will then move within a 1.3319-1.3854 consolidation zone before another attempt to the downside. Once prices have moved within the above mentioned consolidation zone, any sustained break of the 1.3319-1.3854 zone will see further price extension in the direction of the break. As to the session ahead, intraday risk favors the upside with 1.2723 as the initial target while 1.2640 holds.

GBPUSD fall from yesterday’s 1.4180 high remains active as only a 1 hour open and close above 1.3909 will complete this fall while yesterday’s low of 1.3742 holds. Medium and long term risk clearly remains to the downside after eight consecutive months of lower closing prices while the February 2009 close of 1.4311 was the lowest monthly close since March 2002. Though February prices closed well above the 1.3502 low witnessed in January of this year, the move lower over the last few months has been the most explosive move in GBPUSD since 1992 with potential for 1.0345 in the months ahead.  A March close below 1.4 together with a April open below 1.4 and a close below 1.35 will firm up the outlook that GBPUSD will contunue to move lower in the months with the 1985 low of 1.0345 as the objective.

We will have additional updates posted as needed.  RW