1) the Euro was decreasing against the US dollar from 1995 till 2001: it went from a high of 1.44 to a low of 0.86
2) as from 2002, the Euro started appreciating versus the US dollar until 2008: it went from 0.86 to a high of 1.60 in June 2008
3) as from mid-2008, the Euro fell abruptly against the dollar to go from 1.60 to 1.24; this corresponded to the period when the stock markets krashed
4) the EUR-USD stands now at 1.42, exactly at the midpoint between the low of 1.24 and the high of 1.60 !
Let's now zoom up to the weekly chart:
1) I use the 200 day moving average to determine long-term reversal points
2) in August 2008, the EUR-USD crossed below this moving average, giving a short signal (sell the euro, buy the dollar)
3) Mid-May 2008, the EUR-USD crossed above this moving average, giving a long signal (buy the euro, sell the dollar)
Now let's further zoom up to the daily chart:
1) the EUR-USD is in an uptrend as it has been making higher lows over the last 3 months
2) the EUR-USD has been consolidating in a trading range since early June
3) a resistance appears at the 1.43 level.
My conclusion?
1) the trend is going up; therefore trade only in the direction of the trend and only initiate long positions in EUR-USD
2) wait for this currency pair to leave the trading range and go above 1.4330-1.4350 before entering into a trade, and always beware of possible fake moves as the one that occurred early June (see the above chart)
3) if the EUR-USD can go above 1.4330-1.4350, we can expect a huge spike up, first to the 1.4600-1.4700 level, then much higher
4) this scenario would become obsolete if the EUR-USD goes below 1.3800 as the trend would then reverse and go down
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