AUD/NZD: Approaching A Cycle Low?
Matt Simpson | Dec 19, 2013 01:46AM ET
While the bearish momentum in the current decline cannot be ignored, the longer-term charts do display potential for an 8.5 year cycle (also known as the 'Juglar Cycle') which is a long-term economic cycle.
There are two reasons my eyes have been glued to this chart. First and foremost it has provided excellent shorting opportunities as the bearish momentum continues to grow stronger and it keeps trading to new record lows.
The second reason is I am going to NZ next week and haven’t done my Christmas shopping yet. Every tick the market goes down the cost of my Christmas goes up, so I will have to offset this with trading short positions.
Whilst I am suggesting we may be approaching a cycle low, for true cycle analysis you can never have enough data. Ideally I would need 100+ years’ worth of data to assess market cycles around 9 years. However I am considering this cycle because it does fall within the 9-11 economic cycle called the 'Jugular Cycle'.
We are quickly approaching a previous zone of support which marks the low of the previous jugular cycle. Also note that whilst the chart does indeed look incredibly bearish, during the GFC this market declined at its fastest rate of 2400 pips in 14 weeks, to the regain the entire amount in 18 weeks.
I doubt very much we will see that bounce before I do my Christmas shopping, but it is an idea to keep on the back burner as we head into 2014.
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