FX TECHNICAL ANALYSIS
In fact, it was the wealthiest family in the world over a century ago - the Rothschild family - that pioneered the use of cycles. Af ter the French Revolution in the late 1700s, the Rothschild family created
the The of major
banking house in Europe.
founder,
Mayer Rothschild, sent to
four Vienna ,
London, and
his sons Paris, Naples,
respectively. This positioning enabled them to prosper during the British Industrial Revolution in the 19th centur y.
The Rothschild f amily c reat e d
the s t ructur e
for the int ernational b ond ma rket,
which
made bonds mor e easily tradable. Thi s was impor tant fo l lowing the difficu lt 18th centur y e conomic upheav a ls, which left many Europ ean count ries in the 19th century with signific ant budget deficits (sound famil ia r?) due to wars – pa st and future (also sound famil ia r ?).
The Rothschild family decided to look back at patterns that could help plan for the future
The Rothschilds prospered - and not only
from the bond
market. They hired scores of accountants to calculate “c ycles”
While many think of cycle in terms of the nine-year inventory cycle or the 60-year cycle in interest rates, the Rothschilds plotted
many back “cycles”
from sets of data series going
hundreds
of years, in many asset classes. How? They found overlapping
patterns
where the majority of the cycle tops and bottoms coincided, and concluded that the confluence of many cycles (i.e, a sine curve
These count ries we re not consider ed great cr e dit risk s (sound famil ia r ?).
in agricultural commodities, interest rates and other economic indicators.
They researched across
many hundreds of years to find prices in these areas. It is quite reveal ing to know that the word “cycle” comes from the Greek word meaning circle. (It is also interesting that the Charles Nenner Research Center called for the top of the Euro at 151 EUR/USD, and called for it to move down to 122 EUR/USD, and then 118 EUR/ USD, three months before the first Greek crisis !).
44 FX TRADER MAGAZINE April - June 2014
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