What happens during a mid-cycle dip?

A mid-cycle dip refers to a temporary decline in prices that occurs during the advance phase of a longer-term cycle. This phenomenon typically arises when the market reaches a high point within a dominant cycle. At that juncture, traders and investors might take profits, leading to a short-term decrease in prices, which aligns with the idea of a dip in the composite wave.

The composite wave represents the interaction of various cycles, and the mid-cycle dip occurs right before the cycle is expected to continue its upward momentum. This movement is part of the normal rhythm of market cycles, where price retracements often occur as the market corrects itself before continuing in the dominant direction.

In this context, understanding the relationship between cycles and price movements helps market technicians identify potential buying opportunities during these dips, as they can indicate a continuation of the prevailing trend after a brief setback.