The charts show that the euro could see a “fast rally” and lift the market with it, says Jim Cramer.
CNBC’s Jim Cramer on Wednesday said the euro could appreciate in the near future, based on analysis from DeCarley Trading technical specialist Carly Garner.
“The charts as interpreted by Carly Garner suggest that the euro is poised to bounce back – if not now, then very soon – and I wouldn’t be surprised if she’s right and it helps lift the entire stock market along with it,” he said. .
The US dollar and the euro reached parity or the same value on Tuesday for the first time in 20 years. While the US dollar index rose, the Eurozone energy crisis and economic problems put pressure on the value of the euro.
To explain Garner’s analysis, Cramer first studied the monthly euro/dollar exchange rate chart over the past two decades.
While the euro traded at $1.60 in early 2008, it has remained between $1.05 and $1.20 for most of the past ten years, Cramer said. He added that Garner sees the current sell-off as noteworthy as the currency doesn’t usually drop below $1.03.
“With such [many] traders are trying to push the euro down. … She wouldn’t be surprised if there was one last probe to crush the remaining bulls before this thing hits the bottom and starts growing,” he said.
That means the euro could briefly touch 97 or 98 cents against the US dollar, Cramer said.
“Once the narrative changes, Garner predicts a quick rally. Back in 2017, the euro fell below $1.05… but within a year, it was back up again. [$1.25],” he added.
For a more detailed analysis, see Cramer’s full explanation below.