Expect A Counter Trend Rally In US Dollar

October 15th, 2012
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Cycles Analysis:  $US Cycle Counts

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Follow up:

The open question from the mid-week report was the possibility of a short 15 Day Daily Cycle.  From the price action since, it’s fairly clear that the Day 15 low marked just a Half Cycle Low, and we now enter Day 21 seeking the 1st DCL.  The typical timing band for a DCL is 18 to 22 days, so we’re right in the band for such a Cycle Low.

In all it was not the most impressive Cycle from a performance standpoint, but then there is no requirement of any level of performance to qualify as a complete or valid Cycle.  The fact that the Cycle has reversed the previous 8 week trend and formed in a Right Translated fashion is confirming of a counter-trend rally currently in effect.

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As I have eluded in the past, few people believe the Dollar can muster a rally now that Bernanke has come out with QE3.  Whether or not Bernanke has managed to top the Dollar from a secular (3 Year Cycle) standpoint is yet to be determined.  But for the immediate future, sentiment after 3 weeks of recovery remains depressed.  Not exactly the foundation from which a new Cycle is expected to fail.

Click on any graphic for larger image.

Although the first Daily Cycle was relatively flat, we need to remember that Cycles take all forms and shapes, with the main premises simply being that the starting and end points form major Cycle Lows.  In between these points we are accustomed to seeing wiggles and sideways movements.  Until we see confirmation of a breakdown in the Cycles, we should keep in mind that the probability of much higher prices from an Investor Cycle only starting Week 4 (Soon 2nd Daily) is significantly high.

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