(Interview with Jesse of Cafe Americain)
L.S.: Will those ‘currency wars’ intensify going forward according to your analysis, and if so, how do you think they will play out?
Jesse.: Yes they will intensify and we are seeing that already. A fiat currency is an exercise in both confidence and power. As confidence weakens, the use of power must intensify to maintain it.
One of the things that people tend to forget is that when one adopts a common currency, they surrender a portion of their economic autonomy. We are seeing this play out in the European Union as monetary theory would predict.
Consider the following chart in view of the text above:
As the chart shows, we have broken down from a wedge pattern that dates back two years.
The long term indicators suggest continuing downside movement.
The target, if it is fully achieved measures down to the 74 range!
Note that when the 13 ema crosses below the 34 ema on the weekly chart, it usually means a longer term correction down in underway.
Look back to the August 2010 and see that correction took a year to unfold.
A weak currency is not the sign of a strong and growing economy.
Could it be that the charts are suggesting that yet another round of QE is coming soon?