Forex Investment and Currency Trading

The charts below suggest that it is very likely that this is indeed the case and that the trend low has been put in that may eventually yield a new all time high in EURUSD in 2009.

• The 1985-1992 USD bear market compared to the 2002-2009 bear market????
• Prior market peaks were 1987 (2 years) 1991 (Extra 4 years) and 1992 (extra 18 months)
• So far peaks have been 2004 (2 years) 2008 (extra 4 years) and 2009 (Extra 18 months?????)

Similar marginal high would suggest 1.65 next year.

How what was the path of the 1991-1992 move?????

EURUSD 1991-1992

• After the trend peak at 1.4212 in Feb 1991 EURUSD fell to 1.1160 over the following 5 months (21.47%)
• This became the base for the next rally with the first impulsive move taking place from 1.1160 and reaching 1.3525 on 08 January 1992 before a sharp pullback to 1.2125 and a renewed rally to 1.4576 by early September 1992 for a total low to high move of 30.60%.
• The very impulsive part of this move began in October (13.65% into the 8 January high) compared to 14% from late August 2004 into the 30 December high.
• How does all this compare to 2008??????
• The 1.6040-1.2329 was a 23.1% fall over 3 months
• A similar magnitude rally off the lows would suggest something in the region of 13.5%-14% by end December/early January. This would equate to about 1.43+ if taken off the October platform. Above here major moving average resistance comes in just above 1.47. and the 76.4% pullback level at just over 1.51.

All this suggests a danger that this leg of the move could continue into year-end or just beyond after which we could be subject to a pullback as we were in both 1992 (Q1) and 2005 (much longer as a consequence of HIA).
Thereafter however the bias is looking towards the idea that new all time highs could be in danger of being posted towards Q4 2009 and possibly in the region of 1.65. (A 30.60% move if replicated like 1991-1992 equates to 1.61+).

EURUSD Fall in 1991 before bear market for USD resumed into 1992 compared to fall in 2008.

• The speed of this move has certainly been more aggressive than the bounce off the 1991 lows.

Bottom line the NEW DYNAMIC of effective quantitative easing with a zero interest rate structure and a flooding of money into the system could be in danger of creating a period of protracted USD weakness in 2009.

Things to watch that could temper this picture

• Danger of HIA II that could see repatriation similar to 2005
• Renewed credit strains that create renewed USD demand on the de-leveraging side
• Further collapse in Crude leaving less USD diversification
• Picture outside the U.S. deteriorating more significantly encouraging safe haven bias.

Finally. If it walks like a duck and talks like a duck…it’s a duck

The USD walks and talks like a currency going back into its bear market.