July 22nd, 2008

EURUSD reached last weeks initial target of 1.6017 but failed to sustain prices above this level as the pair subsequently corrected lower to 1.5783 which is just a few pips shy of the 61.8% of the 1.5611-1.6037 rise. EURUSD remained within the 61.8%-38.2% of the 1.5611-1.6037 rise as a 2 hour close above 1.5931 will suggest another push higher towards 1.6 and beyond. As to the downside, a 2 hour close below 1.5847 will favor a move lower towards 1.5783 followed by 1.5737 (61.8% of the 1.5302-1.6037 rise). As to the broad outlook, the rise from the November 2005 low at 1.1642 remains active as only a weekly close below 1.4358 will confirm the rise from 1.1642 is complete at 1.6037, with further downside risk towards 1.3840 to follow. So, for the week ahead, look for a 2 hour close above 1.5931 to favor further upside towards 1.6 while only below daily close below 1.5727 suggest further consolidation with downside risk towards 1.5611.

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