If you’ve been following my recent research posts, you already know my research team and I are expecting some very big volatility and trends in the US and global markets over the next 12 to 48 months.
The US Dollar Index fell below a critical support level above 90 recently. This move lower after attempting to bottom in early 2021 suggests our broad Appreciation/Depreciation cycle phase research is continuing to play out. This means we should start to prepare for bigger trends, more volatility, and the potential for broad market price rotation over the next few years. You can read about our Appreciation/Depreciation cycle phase research entitled Long Term Gold/US Dollar Cycles Show Big Trends For Metals and Metals Rally Early In 2021.
You Can’t Fight The Market Tides – Get Ready For The Depreciation Cycle Phase
These broader market cycle phases act like lunar phases in ocean tides. There are always smaller waves that lap at the shore continually, but there are bigger trends, the lunar cycle trends, that drive larger excess tidal highs and lows. The global markets work in much the same manner with the longer-term Appreciation/Depreciation cycle phases (which usually last about 7 to 9 years in length). When we are in an Appreciation phase, precious metals fall out of favor as global traders and investors pile into strong global equity market trends. When we are in a Depreciation phase, precious metals tend to trend higher because global market volatility, a declining US Dollar, credit market and other concerns drive traders into more protective/hedging positions.
In short, the transition from a general market Appreciation cycle phase, which we believe ended in late 2019, into a new general market Depreciation cycle phase suggests the following general trends will take place over the next 5 to 7+ years and likely prompt the following types of price trends:
- Precious Metals should continue to rally as broad market economic and credit market concerns become elevated.
- Larger price volatility and bigger price rotations will likely drive traders to become more cautious of the “buy and hold” type of passive investing. These bigger price swings and how they related to sector trends will create a true “traders marketplace”.
- Commodities usually rally to a peak near the end of an Appreciation cycle phase. You can learn more about these Commodities Super Cycles here.
- Generally, global equities markets attempt to reprice true value within a Depreciation cycle phase. This happens because the end of the Appreciation cycle phase usually prompts a “euphoric rally” type of extreme peak. After that peak exhausts, the transition into the Depreciation cycle phase usually consists of a “revaluing price phase” which is followed by an ultimate bottom, then the start of a reflation phase.
Our technical levels on the US Dollar are 89.99 (which has already been breached) and 88.43. Once the 88.43 level is breached,the next major standout lows are near 84.47 and 79.74. These deeper support levels represent a further decline of -6% to -11% for the US Dollar. My belief is that the markets are transitioning into a new Depreciation cycle phase suggests that any move below the 88.43 level will likely confirm the cycle transition is persisting and that we can continue to expect bigger volatility and bigger trends in metals and within the global markets.
Start Preparing Now For The US Dollar To Breach The 88.43 Level
If our research is correct, the next 5+ years are going to become a “traders marketplace” – where the large rambling bullish price trends are less frequent and where active traders want to start executing strategic trades when the markets confirm real opportunity exists for profits – very similar to what happened between 2002 and 2011.
This following example of the Gold Cycle Phase, as seen on the chart below, highlights the Appreciation/Depreciation cycle phases and shows key Fibonacci Extension price targets near $2100, $2600, and $3200 for Gold. Gold may rally much higher than the $3200 level if the current Depreciation cycle phase is aggressive in nature. Only time will tell what really happens because of this new cycle phase.
If my research is correct, the next 7+ years will test the skills of even the best traders. You’ll need to really be on top of your strategies and fully understand the volatility and risks that are present because of this new Depreciation cycle phase. This is the type of market where huge opportunities exist if you can stay well protected from the risks and volatility while capturing the big trends. Are you ready for these exciting market trends? Want to know how we can help?
You can learn more about how I identify and trade the markets by watching my FREE step-by-step guide to finding and trading the best sectors. Of course, my BAN Trader Pro newsletter service does all the work for you, with my daily pre-market reports, proprietary research, and BAN trade alerts.
Enjoy your Sunday!
Founder & Chief Market Strategist