Week of August 21-27, 2010

EURUSD’s broad outlook continues to favor further downside extension as ONLY a weekly open and close above 1.3124 will complete the fall from the November 2009 high of 1.5143 at the June 2010 low of 1.1876.  As to the medium term corrective rise from 1.1876, this rise is now complete at the August 2010 high of 1.3332 with last weeks open and close below 1.2776 .  In that prices have now entered the 1.2432-1.2776 consolidation zone, look for a sustained break of this zone to see further price extension in the direction of the break with a downside break initially targeting 1.2132 while to the upside a sustained break initially targeting 1.2919.  However, risk remains for further downside extension into the days ahead targeting 1.2604 and 1.2432 as the next objectives while 1.2919 caps.