May ’14 = New Euro Downturn
04/30/14 INSIIDE Track:
“The Dollar Index is fulfilling analysis for another wave down into May 2014. This is still expected to involve a spike below 79.00/DX – a level of vital support that represents a 50% correction of the ~73.00–85.00/DX advance. The lows of late-2012, early-2013 & late-2013 were all set in close proximity to this support – another reason why a spike below it is likely.
A drop to ~78.00/DX would have the Dollar testing the lowest low of the past two years, retracing .618 of May 2011–July 2013 advance and completing an intermediate HHL projection (84.96 high–81.58 high–projected 78.20/DX low; based on continuous-contract levels).
There are several longer-term cycles that portend an important bottom in May 2014. These cycles include a ~3-year high-low-(low) and a ~5-year high-high-(low) Cycle Progression, a ~6-year high-low-(low) Cycle Progression & a 16-19 month low-low-low-low-(low) Cycle Progression.
If that last cycle stretches to 19 months – into May 2014 – it would represent the exact mid-point of the Dollar’s most common cycle – a 38-month cycle. So, a continued decline into May 2014 and down to ~78.00/DX is probable before the next significant advance. A drop into May 5–9, 2014 would also represent an exact 100% retracement in time (43 weeks up/43 weeks down).
The Euro continues to edge higher, but is seeing less and less follow-through to each advance. This segues nicely into an examination of the longer-term outlook for the Euro… and how the action of the past 6-9 months could be corroborating that and setting the stage for a new decline…
In order to place current action and price levels into perspective, consider that the Euro remains well below its April/July 2008 major peak and is trading about mid-range of the 6 years since then (range of ~1.2000–1.6000/EC). So, it is right around the 50% rebound level.
The Euro also remains below its secondary, April/May 2011 peak and is trading at about the upper 2/3 point – very close to .618 – of the 3 years since then (range of ~1.2000–1.5000/EC).
However, it has rallied – since its July 2012 low – about 1.5 times longer (duration, not magnitude) than it had previously declined. In other words, it has been a more laborious rally – reflecting an underlying, relative weakness as it takes 21+ months to recoup only 2/3 of what was lost in the preceding 14 months.
Of the three advances since the April 2008 peak, the current one has also been the weakest – rallying (in 21+ months) about 2/3 of what those previous rallies gained in 11–13 months. This type of wave comparison shows an advance that is running out of steam.
While these ‘relative’ wave & retracement comparisons do NOT automatically signal a top, they do show that the Euro could enter an accelerated decline with little notice – if it begins to show weakness in the coming months. When is a top most likely?
April/May 2014 represents the next phase of a ~3-year cycle in the Euro – when a multi-month top is most likely…
A top in April/May 2014 would perpetuate a ~3-year/36-month high-high-(high) Cycle Progression, linking highs in April 2008, April/May 2011 & April/May 2014.
A high on May 5–9, 2014 would complete a 180-degree advance from the Nov. 8th low and a 90-degree advance from the Feb. 6th low (resulting in a 3-month/~90-degree low-low-(high) Cycle Progression).
A related 29-day high (March 13th)–high (April 11th)–(high) Cycle Progression already anticipates a high for May 9th/12th. (For all intents and purposes, this is a ~30-degree cycle – increasing the synergy of geometric cycles converging around May 9th).
A rally into May 9th would complete back-to-back advances of 35 days each (wave equivalence)… in which – AGAIN – the latter advance is likely to be shallower and more laborious than its predecessor…
4 of the last 6 weekly LHRs – combined with multiple wave projections – anticipate a rally to 1.4016–1.4153/ECM by May 9th. Of course, the lower the peak (providing it spikes above the previous high of 1.3966/ECM), the more relative weakness it would exhibit and the sooner that an accelerated decline could take hold.
Monthly resistance – for May 2014 – is also shaping up around 1.4000/ECM. So, the Euro appears to be approaching a pivotal time and price when an important transition could take hold.”
Euro reinforcing projections for next downturn in May 2014, following cycle highs in early-May. Euro poised to enter ‘accelerated decline with little notice’… as next (intensifying) phase of Euro & EU expectations for 2011–2018. Multi-year cycle projects future focus to April/May 2017.
Dollar nearing MAJOR support and poised to enter accelerated advance. May 2014 expected to usher in decisive phase of Dollar advance & Euro troubles. As stated many times before, that should then usher in the next phase of Euro-trouble… and reinforce the projected European Union ‘breakdown’ – expected to last into ~2018.