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THE WHAT AND WHY OF CYCLES

Surfcity Cycles Posted on November 6, 2016; 11:03 pm EST by FullgoldcrownFebruary 13, 2017; 12:37 am EST

Fully asked me to re-publish a Cycles Primer to refresh everyone with a bit of Cycle theory and rationale.

With regards to Price, I use a number of Technical Analysis (TA) tools in my work, including classic Edwards & Magee Chartology. With respect to Time, however, I rely on Cycles.

You can see the Cycle Highs and Cycle Lows on any chart of at least 6 months in duration.  Walter Bressert and WD Gann believed that these Cycle Highs and Lows oscillated with Investor sentiment as it swings between overly Bullish to overly Bearish in terms of outlook. While Price reflects Investor Sentiment, Time is also critical to understand regarding potential swings or “Turns” in various markets.  Time, therefore, is the missing element from most standard Technical Analysis and is extremely important to track, IMO.

Time alone should not be relied upon for turns as Cycles only give you a timing band for the next Low and are not as reliable for determining Highs.  Timing Bands, however, can heighten your senses allowing you to focus TA oscillators and price action near important turn dates.

The most important Cycle I track is the Intermediate Cycle, which for most Assets lasts approximately 5-6 month in duration Low to Low.  This seems to be the standard time needed for sentiment to swing from Bearish to Bullish to Bearish again.  Each Intermediate Cycle can and does have several shorter term Trading Cycles within it (some refer to these as Daily Cycles).

There are also various types of Cycle Methodologies.  What I have described above is Bressert’s “Count Based” methodology in terms of Trading days and weeks.  This methodology is fairly reliable in establishing a timing band for the next Low.  It is LESS reliable in predicting a Cycle High for a cycle of any length.

This is where my Price Channel work comes into play along with my collaboration on Gann Turn dates with my colleague Norvast.  Norvast’s Gann insights have the ability to “Narrow” the timing band down to a much tighter range.

WHY are Cycles important?

  • Cycles can provide a trading edge by establishing timing band dates for Cycle turns.  While the bands are primarily for Cycle Lows but I’ve got a few tricks in the bag for Cycle Highs as well.
  • Don’t underestimate the power of Cycles, as when Cycles turn on important dates, they often will over ride all other Technical Analysis.
  • Don’t believe it. How many times has Gold or other markets turned on a dime with little to no warning from conventional TA tools?

Approach:

Chartology and standard Technical Analysis (TA) are still my bread and butter in understanding markets.  Cycles, however,  heighten my focus and attention near potential turn dates.  In my work the focus is on identifying Turn dates using timing bands. Within the Timing Band, I then focus on various oscillators, including divergences (MACD, RSI, etc.), and price action near key cycle trend lines or price channels. My overall approach is to blend standard TA and Cycles methodology to create a unique Cycle Price Channel to help visualize where the market is likely headed, both short term and longer term.

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Weekend Reading on What and Why

Surfcity Cycles Posted on January 28, 2017; 6:27 am EST by Surf CityJanuary 28, 2017; 6:27 am EST

The “WHAT” is Part One and the “WHY” is Part Two, below my chart:

If you are going to invest or trade in the commodity complex, you had best understand where the USD is headed…

Part One: The USD has many Cycles of various lengths.  Like most assets I follow, it has a 5-6 month Intermediate Cycle (IC) and a Yearly Cycle (2 ICs).  Longer than that, it also has a 3 Year Cycle and a 15 Year Super Cycle which is clearly shown on my chart.

It is important to understand where you are in the longer Cycles as they will typically dominate the shorter ones. That said, my cycle work shows that the USD’s longer term 15 Year Super Cycle should be topping in 2017 based on TIME. It has either topped or perhaps it will top later this year after making one more push higher.

This is “WHAT” I am seeing in the charts with my Cycle analysis.

As to “WHY” the USD is topping, history has shown that Republican Presidents typically want a weaker USD as a matter of policy.  Witness Trump’s recent comment:

“The dollar is too strong” he said before adding “Our companies can’t compete with [China] now because our currency is too strong.  And it’s killing us.”

Part 2 ~ The “WHY” and perhaps some of the “How” as well.  The attached post from JC Collins provides the best explanation I can find as to why the USD will start getting weaker. This post is a good read (check out the various links within it as well if you have time ~ fascinating stuff, IMO)

Trump Is About to Hammer the Federal Reserve (FREEPOM)

Previous USD posts:

https://surfcity.co/category/USD/

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#Gold and the #USD Weekend Update

Surfcity Cycles Posted on January 10, 2021; 5:15 pm EST by Surf CityJanuary 10, 2021; 5:15 pm EST
This content is for Surf City Cycles members only.
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Posted in GDX, Gold, Members, USD

#Gold and the #USD Mid-eek Update

Surfcity Cycles Posted on January 6, 2021; 9:26 pm EST by Surf CityJanuary 6, 2021; 9:26 pm EST
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Posted in GDX, Gold, Members, USD

China and Gold

Surfcity Cycles Posted on August 30, 2018; 9:21 pm EDT by Surf CityAugust 30, 2018; 9:21 pm EDT
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Posted in Alert, Members

Stocks and Bonds Cycle Update

Surfcity Cycles Posted on February 7, 2018; 6:14 pm EST by Surf CityFebruary 7, 2018; 6:14 pm EST
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Posted in Bonds, Members, SPX

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