First, cycle analysis teaches us that the news is not what is running the markets, but cycles are – which affect the market moves occurring at major cycle tops.

Second, there is a growing sense that, with cycles, the “craziness” and volatility of currency markets, not apparently explainable by fundamental research, is understandable based on past patterns repeating. This provides comfort to those looking for explanations to market movements. Clearly, media sources around the world would like to explain it otherwise. However, it must be remembered the media is concerned primarily about one thing: selling advertising space.

Third, cycles also govern macroeconomic indicators as well – unemployment, GDP, volatility, Institute for Supply Management figures, shipping activity, etc. This also allows for a completely different world view in these areas as well, which can supplement traditional adjuncts to currency trading.

We believe that traders would be wise to learn about the use of cycles in their planning. Take it from a family, the Rothschilds, who, a long time ago, decided to look back, even then, at patterns that could help plan for the future.

In today’s turbulent environment it would be wise for traders to consider analysis based on cycles, which provide a toll for market timing.

A visual example is always helpful.

Chart 1 shows a recent forecast on the Euro/Yen cross.

TECHNICAL ANALYSIS Cycle Analysis in Currency Forecasts EUR Yen
chart 1: EUR/JPY – Weekly Cycles – March 23, 2014 Sunday – Forecast 7 of 15

Euro/Yen cycles are close to a bottom again

Let’s look our recent Euro/Yen forecast, sent on March 23, 2014, as an example of how our system looks to predict directional moves.

The chart shows two lines – a blue one and a red one. The blue one represents actual Euro/Yen weekly closing prices (as shown at the bottom right of the x axis). The red line represents over 20 cycles, which are combined using Fourier and other proprietary analysis tools, to show the confluence of cycle tops and bottoms in one master cycle line. The dotted vertical line extending from the end of the blue price action line shows a cycle bottom of 04/05/2014 – April 4, 2015. That date is indicated in the upper left part of the chart.

According to weekly cycles, the Euro/Yen looks to have an up move into the summer of 2014. The price target is determined by another algorithm, which is based on physics!

Our system has allowed us to predict key currencies moves: Both the Canadian and the Aussie Dollar, when both were around 67 to par against the US Dollar, were called to go to par – which they both did. As we said earlier, the top in Euro came before the first Greek crisis, and then the move to 1.22 EUR/USD and then 1.18 EUR/USD, before reversing and moving up to today’s levels. The Charles Nenner Research Center also sees a major top for the US Dollar after Q2 of 2014. 

Charles Nenner & David Gurwitz