Cycle Trading

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Friday was day 22 for the dollar’s daily cycle.
Should Monday form a swing low making today the daily cycle low, the dollar would have printed a neutral translated daily cycle.

If the daily cycle low prints on Monday, or thereafter, the dollar’s daily cycle will become left translated and the odds of having failed daily cycle increases with each passing day.

I believe that the dollar will hold above the previous daily cycle low primarily because this is the first daily cycle of a new intermediate cycle. I am not aware of the first daily cycle of a new weekly cycle ever failing.

Having said that, I am not that optimistic over the dollar’s strength going forward.

The weekly chart shows a two week peak and a reversal candle followed by three straight weeks of lower lows.

There is a good possibility that the dollar has already begun its primary decline into a weekly cycle low.
If so, the dollar could trend lower for another 11 to 16 weeks.

I have studied the 77 weekly cycles between 1992 & 2008.
Of those 77 weekly cycles there has been 5 weekly cycles peaking at week 2 out of the 77 studied — 6.49%

Combine that with the fact that three straight weeks of lower highs & lower lows signals a high probability of the weekly cycle in decline.
Over the past 10 years, there was only one example of a three week sell off that still went on to print a higher cycle peak.

That example was in 2008 in the first weekly cycle following a 15 year super cycle low.
The first weekly cycles following a super cycle low tend to be choppy because of the change in trend.

The dollar is currently in the third weekly cycle following a 3 year low. This set up we have now does not match the 2008 set up. So this reinforces my thinking that the three week sell off is leading into a weekly cycle decline.

So if the currently weekly cycle peaked at week 2 and is now heading into a weekly cycle low, that will likely be a failed weekly cycle printing a lower low.

A failed weekly cycle could set up the monthly cycle to head into its yearly cycle low.

Consider that the daily cycle is due for a leg up out of the impending daily cycle low.
A brief daily cycle rally to begin April could see the dollar tag the declining two year trend line.
A rejection of the two year trend line will likely send the dollar into its yearly cycle low.

Stocks

What can we say?
Stocks keep grinding higher.

What has been characteristic of this rally are the brief 20 – 40 point corrections.

But notice the frequency of corrections.
The first two occurred approximately 20 days apart.
That was followed by one 9 days later, then one 3 days later.

Another way to look at this is that there were 2 corrections over the course of 40 days.

Now there were two over the course of one week.

Despite the 2 corrections in a week, the weekly chart also continues to grind higher.

Stocks are 25 weeks into this weekly cycle.
The trend continues until there is a weekly swing high and a trend line break.

If the dollar is rolling over into a yearly cycle decline, that should fuel equities into their yearly cycle peak.

B.T.W.
I received another FAS Buy signal on Friday.
I realize the last signal was stopped out, but that is why we have stops.
Stops should be placed on this new signal below Friday’s intra day low on FAS of 106.64

The Yellow Metal

We see that the status of the weekly cycle is open to interpretation.

Gold’s weekly cycle peaked on week 8 and formed a swing low this week.
There is also a break of the declining trend line.
The question is did gold print a weekly cycle low?
I want to refer back to something I mentioned last week
“14 out of the 31 weekly cycles that I have studied (since 2001)had printed a low between 9 and 14 weeks (45%). Again, that is hard to ignore.”

The evidence is starting to pile up.

Friday was day 6 for gold’s daily cycle.
It also appears that gold set its daily cycle trend line on Thursday.
It is not likely that gold will breach the intra day low on Thursday unless this is a failed daily cycle.
However, if this is the first daily cycle of a new weekly cycle, this cycle should form as right translated.
The key to this daily cycle will be gold’s test of the day three intra day high of 1696.10.
A break above that level would signal that this is the first daily cycle of a new weekly cycle.

Oil

Oil clearly broke to the downside out of consolidation and is headed into a daily cycle low.
Oil is very dollar sensitive and perhaps that it broke down out of consolidation means that it is sniffing out the expected dollar rally out of a daily cycle low.

I would think that the severity of oil’s decline into a weekly cycle low will correspond inversely to the vigor of the dollar’s rally out of an daily cycle low.

In the meantime, I will leave you with an image of Ben hard at work …