Yesterday‟s rally to the 2011 downtrend halted the string of rally days in the Euro. Both short and long-term trends remain positive and the pattern from September is still best interpreted as a “bull-flag”. Still a breakout above both the „11 downtrend and flag resistance at 1.3000/20 this week is needed to confirm the bull call. S/t, the current pullback is testing the recent breakout at 1.2883; just below is a 50% retrace at 1.2873. A failure to hold this support can see losses stretch to 1.2840/30 where the next confluence of support aligns the Wave-1 high and 61.8% retrace. Levels: Support – 1.2883, 1.2874, 1.2841 Resistance – 1.2915, 1.2944, 1.3009.
NOMURA