Dollar:
I’m going to spend a good bit of time today on the dollar because it is going to be the key to what I envision unfolding the next few months.

I’m going to start off with the largest 3 year cycle and then work backwards.

The last four major 3 year cycles have all run 3 to 3 1/2 years in length. The current cycle is 2 years and 6 months old. Now there is a chance the 3 year cycle could bottom this fall as the current intermediate cycle bottoms. However that cycle is due to bottom in November or early December. That would leave the 3 year cycle a bit short. For that reason I expect the current cycle to run at least one more intermediate cycle into the March – June time frame. This is a big reason why I think the C-wave in gold may have two legs up instead of just one.

Next let’s back down to the next smaller cycle – the yearly cycle.

I’ve marked the last two yearly cycles in blue (notice how they are making lower lows). The last two yearly cycle lows occurred in December. The current intermediate dollar cycle should bottom in late November or early December. That skews the odds heavily in favor of the next intermediate cycle low not only marking an intermediate bottom but also forming a higher degree yearly cycle bottom in the same end of the year time frame as the last two yearly cycles.

After the aggressive collapse we’ve seen in the dollar over the last couple of months there seems to be little question the dollar has begun working its way down into that yearly cycle low. The only question now is how long before the current intermediate cycle (which began on August 8th) tops. I suspect it will be fairly quickly. As a matter of fact I think the current daily cycle will most likely be the last right translated daily cycle imbedded within the current intermediate cycle.
My best guess as to how far the correction drops would be at least 50% of the recent rally. Most daily cycles do tend to give back at least 50%.

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