Euro--Long Term Patterns
Looking at the remarkable rise since the low registered in November of 2005 (1.1640). The breakout in the following spring to 1.2980 (late May of 2006) as alpha, the low in late July around 1.2460 as beta. (There were actually three retracements to this approximate level after the May high: first in June to 1.2475, then the July low, and finally an October re-test at 1.2480.)
Since that base the market moved up to the 1.618 region in December of 2006, then the 2.618 region in June-July 2007. After that there have been two extrememly impulsive moves: the first which gravitated around the 4.236 level (all through the Fall of 2007 and early winter of 2008), and then the present move (the greatest part of which occurred last month (March 2008). It is approaching a 6.854 level above 1.60 (1.6035).
In a manner similar to the overlaying patterns noted in the eurgbp marketl, there is a shorter term pattern with a delta target in the same region as that shown in the weekly chart above. And like the eurgbp overlay, the alpha is the high first made above the 4.236 delta level on the weekly chart (the high made late last November at 1.4966. With this as alpha and the subsequent low in late December at 1.4308 as beta, the following pattern develops:--
The difference between the eurgbp chart and the euro chart is that the eurgbp has already met its target, while the euro is still working towards its target. If these patterns are valid, it would require a GBP rally at least as strong as an upcoming euro rally.
At the present moment the euro is trading around 1.5550--is it a buy here?