The following is a daily look at the EUR/USD currency pair for December 2, 2009.

Since Nov 27, we have had a nice short term trend higher within the larger range.  Currently the EUR/USD is trading right around 1.5100 which is towards the upper part of this overall range.  A trendline can be drawn along this movement – on my own chart I have drawn two: one based on extreme moves and one normalized (see this months “Stock & Commodities” magazine for my article on using trendlines).  At this moment those trendlines provide a band of support between 1.5060-1.5040.  This band also aligns with horizontal support, so a dip below that area indicates a further slide.

Further support is at 1.4980-1.4960 (not expected to be broken today).  A break below this, targets the lower support levels of the range including 1.4920 and 1.4880.  With an average daily range of 135 pips, these last two levels are forward looking and not targets expected today.

Monday rallied right to the end of the day and resistance is now that high right around 1.5120.  A pop above that level will need to get through 1.5150 to indicate another swing higher. Targets for a another swing higher are 1.5185, 1.5215 and 1.5240.

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Trade in the direction of the trend but do not become attached to it.

Cory Mitchell, CMT
Chief Market Strategist
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