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Comparing Euro Currency Pairs in the Current Cycle

Euro Conundrum

There has been some fascinating discussion regarding the most prominent of traded instruments, the Euro against the US Dollar, in recent times. Contributors over at HurstCycles.com have speculated that the recent trough on January 25th was possibly a trough of 54 month magnitude.

I didn’t share those thoughts entirely, my view is that across all the Euro pairs I trade: EURUSD, EURJPY and EURGBP the low on January the 25th was of 20 week magnitude, with a straddled larger trough behind us. Ambiguity aside, it was most definitely a trough of 80 day magnitude and in this post, which kicks off my thoughts on the Euro, I will compare the 3 majors in questions.

EURUSD

Of the three pairs I will analyse in this post, EURUSD is in middle of the three in terms of bullish/bearish sentiment. Take a look at the most recent phasing I have below:

EURUSD_£__daily_06_03_2015

In all three of the Euro pairs I believe there was a 40 day trough that formed on the 20th of February. Sentient Trader won’t let me pin that trough yet on the EURUSD but it is clear below on the EURGBP. The underlying trend is strongly down and so that bounce was pretty much nonexistent. I believe price is heading towards the 3rd 20 day trough of this 80 day cycle, giving the next 80 day low at the end of March. We are 40 days along the cycle.

EURGBP

EURGBP_£__daily_06_03_2015I was able to pin the 40 day trough on EURGBP which gives clearer nests of lows forthcoming. EURGBP is the most bearish of the 3 pairs in my opinion. Look for a small bounce out of the very near 20 day low before another collapse into the 80 day.

EURJPY

EURJPY_£__daily_06_03_2015EURJPY is the most bullish of the three. It has not taken out its low as yet. As with the EURUSD I could not pin the trough in ST so the phasing is not crisp. I should be able to do it next week with more price information coming in. I expect the low of January 25th to be taken out before the 80 day cycle trough forms.

In summary then: if this phasing is correct the outlook for the EURO is pretty bearish with a fall into the 40 week trough due in late May/June of this year. That trough will also be at least an 18 month cycle low, in my opinion.

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