Just wanted to say a quick hello to my fellow Slope-a-Dopes from la belle France. I'm in Bretagne for a couple of weeks hanging with my cousins. I just had to get away from the markets for a while. I have been so dead wrong for the past 2 months that I needed a break.
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I believe the EUR/USD is going to approach parity within the next year. All the nonsense we've seen in Europe over the past couple of years is going to start giving way to reality, and even with Helicopter Ben's efforts to devalue the US dollar, the Euro is going to do a better job pushing its way down.
Below shows the past half-decade or so, plainly illustrating the three instances of a Euro-swoon. As long as we can crack that ascending trendline I've drawn (which is quite close at this point), we should continue our way lower. As with all things financial, it'll never move in a straight line, but over a period of months, my opinion is that we'll break all the lows seen in this chart.
I've highlighted the current pattern below. I'm most focused on how the behavior of the EUR/USD is analogous to the prior two instances, but I'd also point out the substantial head and shoulders pattern in the making.
Here's a much longer-term perspective. As you can see, my target is about $1.10 sometime in the middle of 2013. It should be an interesting ride.
That was the story for the week. I think there are hardly any bears left in town. And I forgot how long the major indices have been going up without even a 1% correction. But the fuel tank is empty and the rocket has been going up on vapors as you can see.