Zoom Out and Relax

It was Sunday afternoon in US. I was doing my weekend reading. The doomsday predictions about how EU is about to disintegrate were dominating the headlines. Why does the media hype these kinds of cataclysmic events (like Y2K world-wide computer system failures), only to forget about them when they never happen? It is their job and they are good at it, this sells their content and pays big bucks in advertising.

And we, the traders, are to do our job that pays us - look at charts. So with heart rate accelerating, and all kinds of worries about the eventual Financial Armageddon II going through our heads, let's zoom out and look at EUR/USD, which many are saying will either go to parity or plain out disappear into oblivion.

Below is the monthly chart. You can clearly see that EUR/USD is trading 1200 pips above the low made in 2010, when Greece was about to fall off the face of the earth, and 700 pips above the low in 2008, made during Financial Armageddon I. Many say that this is a function of Dollar devaluation and relentless Asian and Middle Eastern diversification into Euro. Whether those are true or not, something is keeping this pair from collapsing.

I want to draw your attention to symmetrical triangle that has formed on monthly chart. There are potentially two more years left inside the symmetrical triangle before price gets to the apex. I will not be surprised if EUR/USD just trades inside of it and marks time for EU debt crisis to be solved and Fed's QE3 to go by. I say this pair is range bound at worst, and somewhat biased towards upside move in the short term at best.

click on chart to enlarge