The overall theme here is that a major new bullish regime is underway. The 21 November 2022 low was a 54 month cycle trough. This is one of the major cycles and generates very long and powerful moves. In Hurst cycle analysis, according to something called the principle of synchronicity, if a large cycle has bottomed then we can say that all shorter cycles have also bottomed at the same time.
The chart here shows pretty much a full 80 day cycle. This cycle just peaked and the next trough is about a week away. Notice how close in time the peak is to the next trough: the peak came in very late in the cycle and we call this peak right translation. It came in late because the underlying trend is bullish (because a new 54 month cycle is powering up). So when you see late peaks assume that the pullback will be shallow: the market is bid high and aggressive sellers will be less dominant. Traders will be looking for any excuse to get back in on the action. Our hedge fund clients for example are all waiting to pull the buy trigger again.
The orange dashed line is called the composite cycle. It is a synthetic of all cycles operating in the data (from 54 month to 5 day) which are added together and the future trajectory estimated. As you can see its due to bottom at the 80 day cycle trough and then resume higher. It is not an oracle and can adjust as real time price action unfolds, but typically it is a reliable guide.
The theoretical sine wave in blue across the chart is based on the peaks of the 40 day cycle. The 40 day cycle will bottom at the same time as the 80 day cycle (the principle of synchronicity again) and peak again - higher we think - in the last week of this month. Notice that the next 40 day cycle is very sharp and has higher amplitude than the last. This means the cycle is very active in the data and is a good choice for the next tactical trading regime.
This note was produced in conjunction with Hurst Cycles Notes. A link to the Macro Outlook note that comes out every Monday has been added and you can see that today’s Bitcoin view has progressed a bit from then. The macro outlook series (subscription $37 per month) covers much of the macro complex: US Dollar, Gold, Copper, Oil, Yen, Euro, SPX, Nikkei, Bitcoin and US 10-year yield, along with extra content, long term views on multiple assets and updates every week.