We have been discussing the Euro a great deal recently. I am expecting a long-term cycle trough to form, and I have mentioned in previous posts how I like to watch the shape of the first 40-day cycle following the formation of a potential trough for confirmation (or not) that it is the big trough we’re expecting.
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A potential trough formed on 13 March 2015, and so we can consider the 40-day cycle that has developed since that trough:
It is a fairly neutral-shaped 40-day cycle (so far), with a slightly early peak making it a little on the bearish side, and a good balanced M-shape. Of course the final trough of the cycle hasn’t formed yet and so it is not too late for the cycle to turn nastily bearish. But if we see signs of the 40-day trough forming soon, from around current levels, then that would make for a good long opportunity in my opinion. (See this post for a discussion of why neutral-shaped cycles do not necessarily mean that the long cycle has not formed a trough)
It is worth mentioning that if the long cycle trough has occurred (as shown on the analysis above) then we would expect the 40-day cycle trough to come in early because of the bullish underlying trend of that cycle.
One of the problems with an analysis of the EURUSD at the moment is that there have been so few well-defined troughs to pin our diamonds to. This makes it difficult to be confident about the position of the long cycle trough. If you are interested in reading about how I apply a fairly “old-fashioned” approach (which I used before the days of Sentient Trader when I performed all my analyses by hand) then read more on the Hurst Cycles website here: http://hurstcycles.com/yet-more-on-the-euro/.
