George Soros became one of the most famous currency traders in the world based on his bet against the Bank of England in 1992 on what became known as Black Wednesday, where he made over $1 billion on the trade.
In the months leading up to Black Wednesday, George Soros had been building a huge short position in pounds sterling. He recognized the United Kingdom was at a disadvantage when Britain joined the ERM, believing the rate at which the UK was brought into the Exchange Rate Mechanism was too high.
Black Wednesday occurred in the United Kingdom in September of 1992, when the British government was forced to withdraw the British pound from the European Exchange Rate Mechanism (ERM) after it was unable to keep the pound above its agreed lower limit.
Now George is sounding the alarm on the Euro.
George Soros has issued a call for Europe to “please wake up” and recognize “the magnitude of the threat” it faces from what he said were its enemies, both internal and external.
Europe “is sleepwalking into oblivion,” the legendary investor warned in an opinion piece published by Project Syndicate on Monday, “and the people of Europe need to wake up before it is too late.”
“If they don’t, the European Union will go the way of the Soviet Union in 1991,” he said, alluding to the dramatic dissolution of the USSR and the fall of Communism in 1991.
On the monthly chart the Euro has been making lower lows and lower highs. If the Euro is going to eventually collapse, it must break the recent low with a target at parity.
However, if and when it gets there, it will be faced with a monthly demand where buyers are waiting to buy the Euro just below parity.
The monthly chart is the most powerful time chart out there. According to Investopedia, a general rule is that the longer the time frame, the more reliable the signals being given. As you drill down in time frames, the charts become more polluted with false moves and noise. Ideally, traders should use a longer time frame to define the primary trend of whatever they are trading.
However, I’m looking for major reversals (on monthly charts) to occur in an attempt to get on board early to ride the new trend. Let me give you some examples, using the Euro monthly chart highlighting the monthly demand and supply zones…pay attention to how price reversed.
I consider George Soros, Smart Money, so one should take his insight into consideration when trading the Euro longer term.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.