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Originally Posted by Abou-Eddie  You are very right in your analysis. The bottom line of recent events is that the US has once again taken financial leadership around the world in its hands, and their policy in my view is that they are going for a strong dollar to add to their previously battered credibility and strength (wahra).
Most European and emerging markets suffered much more, the American people lost a lot (call it collateral damage), but when all is said and done, the American government will come out stronger than ever. Look at it as a war that was won on most of your enemies without firing a single shot. The American people collectively had to lose 10-15-20 pct of their wealth but won a war without offering a single martyr. The money which evaporated from people's pockets all over the world is being replaced by printing new ones. The only difference is that now it is in a different pocket. It has simply changed hands.
As to the charts, I realize that you have studied them over long periods of time, which in my view is correct due to the sky high volatility which you would note if you look at shorter spans of time. But I believe that in this instance charts are not important as this is a one-off situation, a once in a lifetime event. |
if you study the Euro /USD chart for the last 20 years you will see that this pair was always fluctuating with high volatility with spikes reaching 3000 points in an interval of few month ,
I will give you some examples: in the beginning of the 90s the Euro went down from 1.4535 to 1.0344 , which is around 4100 points ,
later on in the end of the 90s the Euro wend down from 1.24 to 0.822 which is around also 4100 points.
In the beginning of the new millennium the Euro went up from 0.822 to 1.365 which is around 5200 points , and also in the year from 2005 to 2008 it went up from 1.16 to 1.60 which is around 4400 points .
So this current move is not a one -off situation or a once of lifetime event , especially that the Euro till now only felt around 3200 points from 1.60 to 1.28 , while historically its fluctuation exceeded the 5200 point barrier .
So charts are always important ,especially when you want to determine the trend of a currency or when a reversal of the trend occurs , otherwise without the charts it will be like trying to catch a falling knife.
