[Dan]

EURUSD


• 1.4845 has been a fairly good support / resistance level in the short term on a close basis.
• It was the trend high that was set on September 23rd. When EURUSD rallied through there on October 13th, it came back to re-test that level before continuing higher to the recent trend high at 1.5064, set on October 26th.
• The market then corrected down and when EURUSD closed below 1.4845 on October 27th, it came back up to re-test 1.4845 (and indeed traded above there on an intraday basis) but could not sustain a rally above there. EURUSD then continued lower to the 55 day moving average where it based on November 3rd
• Since the close back above 1.4845 on November 4th, EURUSD has failed to sustain a move back below despite several attempts.
• Yesterday the market again failed to sustain a move below 1.4845 and closed at 1.4575.
• Also taking into account that Gold is trading at new trend highs, Crude has bounced back and is now testing the flag top and Equities are holding up, we would not be surprised to see a rally now on EURUSD towards the trend high at 1.5064 again and then a test of the May 2008 low at 1.5285.
• The 55 day moving average support is at 1.4755 and trend support is at 1.4719

Major markets short term overlay


• There do not appear to be any major warning signs across markets at this stage to argue against the uptrend in EURUSD.
• In the very short term the relationship between EURUSD and Crude seems to have improved and Crude is currently approaching / testing the top of the flag pattern at $80.13. A rally through there would open the way for $85. Gold however remains, one of the best leading indicators for EURUSD. Although it has trended much higher for several days while EURUSD has not, it is too soon to abandon the relationship between Gold and EURUSD.