AUSSIE CYCLE TRADER - Monthly Newsletter for December 2022
This month we explore whether the AUDUSD rally will continue, and where it could reverse. The XJO has also rallied strongly. Will it continue or give trend followers more annoying 'choppiness'?
As I follow various markets I often think of trading in terms of ‘waves’. Waves and cycles have a lot in common. A wave on the ocean has a peak and a trough, and in good conditions for sailing or surfing, tends to roll through with predictable regularity. If you are a keen surfer you are watching the waves for the perfect formations – long, predictable with good speed and size. No different to trading based on cycles. We watch keenly, looking for the recognisable cycle pattern formations. When it starts to roll through, we adopt ‘surfer mentality’, trying to tune ourselves to the swell, get on the wave at the perfect time and ride it as long as we can. Just like surfers don’t catch every wave, and sometimes they get ‘dumped’, cycle traders won’t get onto every cycle perfectly. Sometimes there’s choppy conditions. Sometimes there’s stopouts. Study of cycles is not always easy, but we study those times where ‘everything lines up’ and we can anticipate a top or a bottom in a market.
In this month’s newsletter, I’ll discuss the ‘choppiness’ of the XJO and whether we likely to see another short term change in trend. The AUDUSD has been surprisingly bullish and we’ll also assess if that is likely to continue.
Enjoy this month’s newsletter and may your next wave be a long one!
Jonathan R.
PS. These newsletters constantly reference various cycle lengths and characteristics. Cycle theory is assumed knowledge, and to a lesser degree, geocosmics. For more background info on cycles and geocosmics, see this link.
Disclaimer:
All information provided is based on analysis of the markets using publicly available information and data. It is provided for your own review and study with no consideration of your personal circumstances. Trading markets always involves risk. No guarantees are made. You are solely responsible for any transactions you initiate in the market.
Review of the AUDUSD currency pair
Since our last newsletter the AUDUSD has shown some promising signs for bulls. Lows have held and any long positions would have been rewarded with some good upward movement.
Since the October 14 low at $0.6157, higher lows and higher highs have resulted. The market moved around 350 points to $0.6851 and closed over the weekend at $0.6767.
AUDUSD Long Term Cycles
The AUD/USD has a 17 year cycle, with 2-3 sub-cycles of 6.8 years (+/- 10 months)
For the 2-phase variation - cycles have tended to expand out to 7.5 years or longer.
For the 3-phase variation - cycles have tended to be 6-7 years, with a contracted 3rd phase of 3-4 yrs.
From last month: The AUDUSD pair is in the first 6.8 year phase of the new 17 year cycle which started in March 2020. While the prices are above the starting point low of $0.5508 the overall 17 year cycle is considered bullish, as is the 6.8 year cycle.
Not much has changed here – we are still bullish or perhaps neutral for the 6.8 year cycle. But there are some bearish signs present – albeit we are still on 33 months in.
This cycle is so far showing a right translation (ie the crest occurring in the early parts of the cycle – shaping the overall peak to the right side). The trend on the monthly chart is down, with lower lows and lower highs. And the currency has spent more time trending down than up.
It’s interesting to see October’s isolated low has occurred in the orb period for the Saturn-Uranus waxing square (within 1 degree). As noted in previous newsletters, this aspect has a powerful correlation with long term lows and highs for this market.