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.
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:
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:
And here is the secondary analysis for comparison:
Let’s see how the cycles play out next week.