ST Outlook – Euro/US Dollar (7 October 2011)

Last week we were waiting for the 40-day (and synchronous 80-day) cycle trough to form, and it is possible that this week our patient wait was rewarded with the formation of a trough on Tuesday 4 October 2011.

Has the 80-day cycle trough occurred?

According to our current analysis this trough should be the expected 80-day cycle trough, but so far it can only be confirmed as having a magnitude of 10-days, as can be seen in this median-price chart:

FLD & VTL levels on a median price chart

The FLD & VTL levels which would confirm this trough as being the expected 80-day cycle trough are very close now to price, and if the Euro manages to end next week above roughly the 1.34 level then the 80-day trough would be confirmed.

Next week is going to be interesting from a cyclic perspective because it should help to resolve which of the two analyses that I have been discussing over the past few weeks is the true one. The difference between the two analyses is:

  • The “preferred” analysis (as presented above) requires one more 80-day cycle to elapse before price forms an 18-month cycle trough (the previous 18-month cycle trough was in June 2010).
  • The “secondary” analysis (as shown below) expects the trough on 4 October 2011 to be of only 10-day magnitude (which is so far all that has been confirmed), and requires only one more 10-day cycle to elapse before the 18-month cycle trough occurs.

It should be clear from the above why I say that next week should resolve the issue:

  • If price moves UP, and confirms the 4 October 2011 trough as a trough of at least 40-day magnitude then our preferred analysis will remain the preferred analysis, and the secondary analysis will become even less likely.
  • If price moves DOWN, and fails to confirm the 4 October 2011 trough as having a magnitude greater than 10-days then the secondary analysis will become more likely, and next week I will probably be discussing it as the preferred analysis, looking to the early formation of the 18-month cycle trough.

Here is the currently preferred analysis:

Another 80-day cycle to go

And here is the secondary analysis for comparison:

Only 10 days to go

Let’s see how the cycles play out next week.

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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