I’m not surprised to see the Dollar turn sharply lower on Friday.  The current Daily Cycle made a new high on Day 18 so was well past due for a decline.  Since Friday's sharp drop occurred deep in the timing band, it’s almost certainly going to mark the decline into the next DCL.  If the current Cycle follows standard timing patterns, we should expect at least 3 sessions lower – this is the minimum length of time we should expect the Cycle to decline.     

My long term forecast for the Dollar has been mirrored perfectly by price movements.  The current Daily Cycle is coming to its conclusion, just as the current weak, 5 week rally is approaching what I believe will be a key pivot point.  The big drop off after November’s week 2 high was too early in the Investor Cycle to continue directly lower into an ICL. So it was expected that we would have a weak bounce, in this case a 5 week “bear flag”. 

If the Dollar was destined for strong gains in the current IC, we would have seen new highs many weeks ago.  When an Investor Cycle cannot break out to new highs by week 11 and after a 5 week rally, it is reasonable to label the move as a counter-trend bounce.  And since the last Dollar Investor Cycle failed, the overall trend of the Dollar is to the downside and more weakness should be expected.

I believe the Dollar will fall from here as the final 1/3 of the current Investor Cycle commences.  There is a massive amount of resistance around the 78.50-79 area – 4 of the last 5 ICL’s occurred in that narrow range.  But there is still plenty of time in this IC to make several assaults on the 78.50-79 level, eventually break through it, and then fall well below.   

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. Now offering monthly & quarterly subscriptions with 30 day refund. Promo code ZEN saves 10%.