EURUSD technical update – Gold

EURUSD is about to reach target 1 at 1.31, although with a daily 9 count we likely have to drop to or even below 1.30 briefly before a brief counter move will show up. Keep in mind our focus remains on 1.22 as the value target (see earlier blog).

Gold does drop in a close correlation and should keep doing so. A 650 level might be the value area to buy – that we figure out in a separate analysis though. First, we retest the 720 level though but that will refer to the 1.30 EURUSD. Keep selling the EURO rallies, since the world believes for now the USA will be smoother to manage the crisis and the trade deficit of America will shrink rapidly due to lower energy costs and cheaper imports accompanied by shrinking demand. The mistake in this equation is that Europeans have a high saving rate with the US close to 0, hence Europeans are more resilient to economic downturns. I agree that at a much later point – at least 2 years ahead – the Euro might be in danger to break apart though.

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~ by behindthematrix on October 21, 2008.

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