US Dollar Could Be Nearing Endgame

December 1st, 2012
in contributors, syndication, forex

by Poly, Zentrader

This as is an excerpt from the mid-week update (sent out on Saturday) from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly, as well as real time trade alerts to profit from market inefficiencies. They offer a FREE 15-day trial where you’ll receive complete access to the entire site. Coupon code (ZEN) saves you 15% after the trial.

It now looks as if the expected Dollar DCL has played out with the recent (Monday) Day 27 Low.  There was some positive (in relative term) news out of Europe with the announcement of yet another Greek bailout adjustment that the market was expecting to be bullish for the Euro.

Instead it was the Euro that fell upon the announcement, a clear indication that the news had already been bought the previous session.  These “sell the news” events are often found during key Cycle (pivots) lows.

Follow up:

Click to enlarge

The rise in the early portion of this now 3rd Daily Cycle has provided some considerable head-winds for risk markets.  As I had outlined within the weekend report, a DCL was expected, but what to expect out of the coming Daily Cycle is still a relative mystery.  Odds favor that we see around 7-10 days of strength out of the Cycle and at least a meaningful effort to get back up towards the prior Cycle High of 81.45.

But I have a sneaking suspicion that the Investor Cycle is tiring and could well have topped with the prior Daily Cycle.  This Investor Cycle is now 11 weeks in and passing its typical half way mark, but yet it has failed to make any significant gains.  Ordinarily we could simply excuse any Investor Cycle for being flat, but in this case the Investor Cycle happens to fall in the timing band where a significant 3 Year Cycle Top may occur.  So in isolation this Cycle may be simply “catching its breath”, but from the dominant Cycle perspective, it is signaling that a significant decline is probably unfolding.  The proof will be in this coming 3rd Daily Cycle because beyond this Daily Cycle it will be just too late for the Dollar to mount any type of surge.

Click to enlarge

As it appears the Dollar (chart above) will not make new IC highs (above July 2012 high) it will form its first lower Investor Cycle high of this 3 year Cycle.  That in itself is not “an endgame”, but if the coming Dollar ICL (in 6-12 weeks’ time) falls below the September low (78.60), that will spell big trouble.  At that point the 3 Year Cycle would have failed and we will have the first set of lower highs and lower lows.  That type of action is what defines a Cycle in decline.

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About the Author

Poly is the founder of "The Financial Tap", a membership site dedicated to helping traders and investors navigate the markets while increasing their expertise and understanding. Poly has over 20 years of experience in trading the markets, is a life-long student of economics, and has an abiding passion for the financial markets. Much of his investment philosophy is top-down in nature, beginning with a global and macro outlook which is used to create a framework that drives his intermediate investments.

Poly is a leading expert in Market Cycles. His love of Cycles grew after his introduction to the work of Walter Bressert, one of the pioneers in the field. Cycles were a natural fit with Poly’s passion for top-down analysis. As Cycles are intertwined on multiple time frames, understanding the global outlook greatly helps him to identify the long dated Secular Cycles. From that point Poly is better able to identify the shorter Cycles and to build a cohesive investment strategy. Poly’s Cycle Analyzer, a software based analytical and intelligence system, is used to predict the future movements of the major financial markets.

Originally from Sydney, Australia, he is now settled and has been working in New York City for the past 13 years. His background and education is in Computer Sciences and he holds a bachelor’s degree from Monash University in Melbourne Australia. He has extensive experience in the Financial Software area and has served as a senior executive at various Fortune 50 management teams developing financial trading and reporting software.

Happily married with two children, family is a big part of his everyday life. Other passions including golf and long distance running. He plans to complete the 2012 New York City marathon.

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