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It's My Parity, and I'll Cry If I Want To

Tim Knight from Slope of Hope's picture




 

Originally published at Slope of Hope........

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.

0303-euro1

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.

0303-euro2

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.

0303-euro3

 

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Mon, 03/12/2012 - 03:44 | 2246607 winter2012
winter2012's picture

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Sun, 03/04/2012 - 22:54 | 2223057 hyper-critical
hyper-critical's picture

Wow - you really just made a public call based entirely on trendlines, the most subjective and voodoo approach to markets out there. The inconsistency in how you apply these to your charts is self-evident. You are clearly unaware of how much of an impact your ex-ante assumptions affect your analysis.

 

Sun, 03/04/2012 - 20:51 | 2222825 jfun3199
jfun3199's picture

buying more junior mining stocks.eventually they will get bought up.

 

Sun, 03/04/2012 - 20:18 | 2222781 Uchtdorf
Uchtdorf's picture

What does the House of the Red Shield want the Euro to do? We can look at all kinds of charts -- including those of spraying tom cats -- but without the inside read on the plans at the top, this trend is hard to trade. Don't get crushed...that's my best advice.

In the meantime, enjoy this: http://walkofftheearth.com/ Click play and enjoy 5 people strumming one guitar.

Sun, 03/04/2012 - 20:04 | 2222756 the grateful un...
the grateful unemployed's picture

as long as everyone holds everyone elses bonds there is no reason to think otherwise. the problem is how do we get to parity, does the dollar strengthen against the other then EURUSD or does the euro weaken? eventually all currencies will be at parity, though Japan has always been willing to play the dummy hand in this game of currency bridge. just not sure about Japan.

Sun, 03/04/2012 - 19:18 | 2222677 falak pema
falak pema's picture

head and shoulders chart goes to hind leg and boulders that smolder from a tart.  

Sun, 03/04/2012 - 19:44 | 2222731 Don Birnam
Don Birnam's picture

Pound...dollar...euro...

It is but a global race to the bottom.

Sun, 03/04/2012 - 17:41 | 2222505 MolotovCockhead
MolotovCockhead's picture

By parity if you mean that 1euro equal to 1$ then you are most likely wrong. If zero equals to zero then you are right! Both are on the race towards the bottom.

Truth be told, as a whole, USA is actually in worse shape than Europe but they have financial terrorists working for them attacking the weakest link in Europe.

Sun, 03/04/2012 - 19:32 | 2222712 LowProfile
LowProfile's picture

 

By parity if you mean that 1euro equal to 1$ then you are most likely wrong. If zero equals to zero then you are right! Both are on the race towards the bottom.

 

Not possible...  The ECB MTM's their gold.

Gold in EUR will eventually have to be much, much higher though...

Sun, 03/04/2012 - 17:19 | 2222447 GoinFawr
GoinFawr's picture

Oh shit, I thought this article was about CAD/USD

nm

Sun, 03/04/2012 - 16:43 | 2222360 Hugo Chavez
Hugo Chavez's picture

No way can bernanke allow parity.

We will need to print away to maintain as high a EUR/USD as possible to avoid letting the europeans steal some of our devaluation mojo.

Sun, 03/04/2012 - 16:06 | 2222275 Jack Sheet
Jack Sheet's picture

This guy must be a pseudonym for Joan Maudlin who predicted parity within a year in 2009

Sun, 03/04/2012 - 17:44 | 2222510 covert
covert's picture

there will be plenty of reason to cry and fight in the coming years.

http://expose2.wordpress.com

 

Sun, 03/04/2012 - 15:57 | 2222253 NoWayOut
NoWayOut's picture

HAHA, Kim Tight speaks.  You heard it here first folks.  Start buying the Euro hands over fist in the coming days/weeks as this joker and his slope of dopers are great fades.  

Sun, 03/04/2012 - 15:51 | 2222229 steve from virginia
steve from virginia's picture

 

Properly priced, the euro should be zero, but the foreign exchange markets can't do that ... can they? Price a currency to zero before 'someone else' prices that currency to zero first?

What would the fallout be? The euro, worthless?

The mystique of the strong euro will be carried along. Watch Germany.

Sun, 03/04/2012 - 19:34 | 2222701 LowProfile
LowProfile's picture

 

"Properly priced, the euro should be zero,"

Not possible...  The ECB MTM's their gold.

Gold in EUR will eventually have to be much, much higher though...

Sun, 03/04/2012 - 15:32 | 2222176 Freegolder
Freegolder's picture

Lines on a chart...he was watching a head and shoulders develop on the SPY back in late 2009 at 900-odd, that was another winning trade for Timmy.

 

Who let this joker on ZH?

Sun, 03/04/2012 - 20:58 | 2222838 ShankyS
ShankyS's picture

The Fed and QE have shreaded the right shoulder of every set up over the past two years. Simple, the fed sees the best squeeze opps, they set the table and crush all those lined up for the slaughter. Right shoulders have been nothing but launching pads. Follow the fed and the liquidity first and then have an eye on TA, it will give the set up when the time is right. 

Sun, 03/04/2012 - 15:22 | 2222143 LowProfile
LowProfile's picture

I'm thinking more like 3rd or 4th quarter 2012.

Sun, 03/04/2012 - 15:16 | 2222123 williambanzai7
williambanzai7's picture

EURO/USD

Sun, 03/04/2012 - 21:12 | 2222867 SokPOTUS
SokPOTUS's picture

What the hell kind of cat takes a leak like a dog?  :)  Gotta be a boy cat.  He hit the spot like an old pro.

Sun, 03/04/2012 - 20:46 | 2222817 ShankyS
ShankyS's picture

No wonder I don't submit my charts to be posted here, LOL. Well done Sir WB7, as always, well done. 

Sun, 03/04/2012 - 19:00 | 2222602 Goldilocks
Goldilocks's picture

lol...
"that's the cat's ass"

Sun, 03/04/2012 - 18:46 | 2222594 Wakanda
Wakanda's picture

Should I get the pooper scooper or wait until 6/2013?

Sun, 03/04/2012 - 15:59 | 2222260 GeneMarchbanks
GeneMarchbanks's picture

Chart of the century, dear William.

 

Sun, 03/04/2012 - 15:37 | 2222191 Sudden Debt
Sudden Debt's picture

:)

That's the kind of chart they should up on the msn sites :)

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