ST Outlook – 4 February 2012

Today we are looking at the long term picture for the Euro/US Dollar forex pair. Here is the chart with the analysis I currently favor, including cycles all the way up to 9 years:

The long term picture

The 18-month cycle trough which we were discussing last year has most probably been formed now in price (on 13 January 2012).

As a personal note, it seems a little ironic that I should be writing a “bullish” post about the Euro today from a beleaguered Italy. Not only is the country I am living in the current pariah of the European community, but today we are cowering under the heaviest snowfall of the past 30 years (and as a South African not very familiar with snow, I have to tell you that is a lot of snow!)

Here is a more detailed view of the 18-month cycle that has recently completed:

The 18-month cycle clocks in at 19.2 months

Is that 18-month cycle trough confirmed? Not yet. So far price has only confirmed that the trough on 13 January 2012 is of at least 80-day magnitude (because price crossed the 80-day FLD on 27 January 2012). Eventually price should cross that 18-month FLD if this is indeed an 18-month cycle trough. That implies a move up to or above 1.40 within the next few months.

The FLD's ahead

Notice how the 80-day FLD has recently provided support for price, another “beautiful picture”! There are some distinct “gaps” in the FLD pattern, areas in which we expect price to linger before pushing through that 18-month FLD.

Next week we’ll take a look at the long term picture in Gold.

About David Hickson

I have been trading for over 20 years, but only had any success after discovering Hurst's cyclic principles. Unable to find any software to speed up the analysis process I created Sentient Trader software, which now pretty much does all the analysis for me. I am a film maker and a TV director, but nowadays I mostly provide consultation services to professional traders and fund managers, helping them to integrate Hurst analysis into their trading. I'm South African and live with my family in Italy.

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