Cycle Trading

The dollar formed a swing low and had a declining cycle trend line break to emphatically declare today day two of a new dollar daily cycle.

Our framework labeled June 7 th as the previous dollar daily cycle low.
Today calls that into question.
Either today marks a unusually short 8 day daily cycle from June 7 th

———————— Or —————————–

May 21 marked the last daily cycle low.
I favor the latter because a 14 day cycle marked on May 21 falls within the time frame for an early daily cycle low whereas I do not believe I have ever seen an 8 day daily cycle.
Before we look at what this means for the intermediate cycle, I want to show you the yearly cycle.

While a suppose that June could be month 13 off the May 2011 yearly low, I believe a more likely scenario was that the yearly low printed in February 212.

A 9 month yearly low is within the normal timing band for a yearly dollar low.
Also I have observed that about half of the dollar’s yearly lows are characterized by a year end coil like the one printed from January through April 2012.

So based on February marking a “stealth” yearly cycle low then that means February also hosted an intermediate cycle low.

Which brings the current intermediate cycle to week 16.

Since about 70% of weekly cycles find a weekly low between weeks 15 & 22 this could certainly mark a new intermediate cycle.

What we will need to monitor is if this new daily cycle rolls over by day 12.

Daily cycles that peak after 12 days tend to be right translated
A new daily cycle that is right translated would confirm a new intermediate cycle.

Having said that, the current intermediate cycle being at week 16 certainly can host one more daily cycle. That would take the current weekly cycle out to week 20 – 22 and still be in the timing band for an intermediate cycle low.

The Miners took it on the chin today

Miners broke down out of consolidation invalidating 6/8 as a possible daily cycle low making Thursday day 25.

Keep in mind that only 10 daily cycles out of the 43 daily cycles from the 2008 low exceeded 25 days. And we have also seen Miners bottoming ahead of equities if the face of a rising dollar. Which means with each passing day, Miners are getting closer to print a daily cycle low.

Of course the dollar also smacked down equities as well.

The daily equity cycle stands at day 13.
It is not uncommon for equities to print a half cycle low between days 15 & 25.
A dollar daily cycle topping within 12 days would fit into this scenario…

No matter how you look at it, it all comes down to the dollar …