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Foundation for the Study of Cycles is registered as a 501(c)(3) non-profit organization. Contributions to the FSC are tax-deductible to the extent permitted by law. The Foundation’s tax identification number is 83-2540831.
The Foundation for the Study of Cycles is a nonprofit research and educational institution dedicated to the interdisciplinary study of recurring patterns in all areas of research. Your generous donation supports continued research for the betterment of our world.
Foundation for the Study of Cycles, PO Box 177, Floyd, VA 24091
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Foundation for the Study of Cycles is registered as a 501(c)(3) non-profit organization. Contributions to the FSC are tax-deductible to the extent permitted by law. The Foundation’s tax identification number is 83-2540831.
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The Foundation for the Study of Cycles is a registered 501(c)(3) non-profit educational institution. Your contribution is tax-deductible to the extent permitted.
Donate by Mail
Foundation for the Study of Cycles, PO Box 177, Floyd, VA 24091
Tax information
Foundation for the Study of Cycles is registered as a 501(c)(3) non-profit organization. Contributions to the FSC are tax-deductible to the extent permitted by law. The Foundation’s tax identification number is 83-2540831.
In my fledgling days as an investor in the late 1960s, I discovered the magic of cycles and other cyclical patterns in the stock and futures markets. The beauty of repetitive price and time inspired wonder as well as challenge. The deeper I looked at cycles in the capital markets, the more convinced I became of their value, not only as a forecasting tool but as a means of more effectively managing economies, investments, trading, and commodity production. The field of cyclical analysis writ large, has fueled literally hundreds of books and thousands of research studies. For this, we can thank Edward R. Dewey, the father of cyclical analysis.
My intent in this brief report is to highlight a market that is, in my view, positioned for a major price move. Because we know that cycles in economic data are not perfect or symmetrical, we use other tools to confirm cyclical turns. We also know that, given the rules of effective and consistent risk management, cyclical market behavior can and should occupy a key role in the management and/or trading of financial assets.
Long-Term versus Short-Term Cycles
I am neither a mathematician nor an economist. I am, however, a pragmatist. I do not spend my time pondering the ontology of cycles; rather I prefer to use them as tools for predicting and investing in large, and often long-term market trends. The 17- to 18-year cycle in real estate, for example, has allowed me to be profitable in every real estate transaction I have ever done. Furthermore, the longer-term cycles such as the 10-year cycle (per Schumpeter) and the three- to four-year business cycles have also facilitated my ability to successfully forecast price trends.
The Here and Now
My long-term forecast in the Japanese yen versus U.S. dollar futures is currently of particular interest, not only pragmatically but intellectually. Shown below is the approximate eight- to nine-year (average 8.17 year) cyclical pattern in Japanese yen futures versus U.S. dollar. Although not perfect and not fully symmetrical, the cycle does pick the major up and down moves. The projection is shown at the right. Do note that the cycle was obtained by visual examination of the available data; it has not been discovered through the application of any cycle finder program. Yes, the data history is limited but the cycle accuracy is impressive. (Note also that this analysis is not a buy or sell recommendation.)
CHART: Approximate 8.17-year cycle in Japanese yen futures versus U.S. dollar
(Chart courtesy of tradenavigator.com)
What the Cycle Says Right Now
The cycle now suggests that a low is possible at any time. I combine timing with cycles to compensate for the inherent imperfection of cycles. Therefore, as soon as my timing indicators in this market turn bullish, I will be on board for what should be a major move up in yen vs. dollar forex and futures. If the cycle holds true, the next few years should prove to be very bullish for yen/dollar.
Reasons
For me, no fundamental justifications are necessary. Typically, these justifications or explanations come after a turn has been made. Those looking for reasons why might want to consider the following factors, which could confirm the cyclical expectations.
As stated and illustrated above, the JPY/USD exchange rate has exhibited cyclical patterns, often with cycles of approximately seven to eight years. These cycles can be influenced by numerous factors such as interest rate differentials, economic growth rates, trade balances, and geopolitical stability.
For 2023, if we consider the historical cyclical pattern, we might expect a low now in the JPY/USD exchange rate. This could be influenced by factors such as:
Interest Rate Policies: If the Bank of Japan maintains low interest rates while the U.S. Federal Reserve raises rates, it could put downward pressure on the yen.
Economic Conditions: Japan's economic performance relative to the U.S. could also play a role. If Japan's economy underperforms, it could lead to a weaker yen.
Geopolitical Factors: Any geopolitical tensions or uncertainties could impact the yen's value as a safe-haven currency. I will issue an update, as necessary.
It's important to note that, while historical patterns can provide some guidance, they are not guaranteed to repeat exactly. Market conditions and external factors can always introduce variability.
About Jake Bernstein, FSC Board Member
Jake Bernstein has been publishing Jake Bernstein's Weekly Futures Trading Letter since 1972 and trading futures and stocks since 1968. His forecasts and opinions are quoted regularly in the financial press and on financial websites, and he is frequently interviewed on radio and television throughout the U.S. and Canada, including Wall Street Week, CNBC, JagFN.TV, and WebTV.com. In addition to speaking extensively in the U.S., Canada, Europe, and Asia, Bernstein is a consultant for investors, traders, industry, financial institutions, brokerage firms, and commercial firms. Floor traders, professional traders, money managers, and hedgers, both new and experienced, subscribe to his market advisory services. Bernstein is based in California, U.S.
