EUR/USD Trading in a Price Pattern Since 2008?

The last Hurrah for the EUR coming in 2023/24

Richard Donchian was a commodity futures trader who pioneered the concept of managed futures and the mutual fund to the field of money management.

Richard documented a set of nine "technical guides."

I believe EUR/USD is potentially trading in one of Donchian’s technical guides (which I will refer to as a price pattern for the remainder of this post) since 2008.

Here is a description of the price pattern in his own words..

“A move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move. Generally, when the second move from the sideways range has run its course, a counter-move approaching the sideways range may be expected.” ~ Richard Donchian

The monthly chart above is to illustrate the price pattern only. I do not recommend trading monthly timeframes. I prefer the daily and weekly timeframes.

Notice in the monthly chart above of EUR/USD the sharp move down in 2008 from 1.60 to about 1.25 (3500 pips) followed by the sideways range from 2009 to 2014. At the completion of the sideways range notice the second move down in 2014 from 1.40 to about 1.05 (3500 pips.)

Is the move in 2017 from 1.05 to 1.25 the counter-move “approaching the sideways range?” Would Donchian consider this price pattern complete?

I dont think it is complete. I think the price action from 2015 to the end of 2022 is a huge bottoming pattern and the counter-move is yet to come in 2023/24.

My reasoning is in the developing fundamentals/inflation dynamics pertaining to EUR/USD.

EU/US Inflation Dynamics

The EU inflation cycle along with the ECB tightening cycle is lagging the US/FED by several months due to EU covid fiscal stimulus being more spread out over time.

When the FED inevitably pivots to easing, this scenario will likely be the catalyst to drive EUR/USD towards the middle of the sideways range and I believe the move will end with a price spike above the 1.25 level.

The Last Hurrah for EUR/USD

I will end this post with a longer term forecast for EUR/USD. I believe this coming counter move up will be the last Hurrah for EUR/USD.

I think Donchian’s price pattern is actually a topping pattern. When the counter move completes EUR/USD will collapse well below parity before inflation is ultimately tamed.

2022 price action (strong USD) is a glimpse of whats to come for the remainder of the decade.

I expect inflation to roar back and likely go to double digits when the FED has to pivot because of current extreme tightening.

History shows when inflation gets above 10% it takes 10 to 20 years to get it back down to target.

The next decade or so should be a wild volatile ride across global markets.