Cycle Trading

You may recall couple of things we discussed in the Weekend Report about the dollar.

One was an expectation for the dollar to print a new high — check.

Two was a new dollar daily cycle should take the intermediate (weekly) cycle right to the threshold of the timing band for intermediate cycle (IC) decline.

A decline into an IC low occurs during the last daily cycle of the IC. These terminal daily cycles are characterized by printing a left translated, failed daily cycle.

Left translated daily cycles usually form their swing high by day 8 approximately 85% of the time and the decline into IC lows typically last 10 – 20 days.

Well the gap up and reversal off the daily high has set up the possibility of a day two peak. The dollar’s daily cycle usually runs 18 – 25 days. That would leave another 16 to 23 days for the dollar to find its low.

Of course, the dollar cannot begin a decline with out a swing high. The dollar would need to break below 83.60 to form a swing high.

Stocks withstood the early surge of the dollar.

Stocks kept alive the possibility that Monday was day7 of a new daily cycle instead of day 34.

If the dollar does rolls over here and equities rally, that will leave the 7/12 as the daily cycle low.

Gold also weathered the early dollar rally well.

Gold tagged the lower trend line that we have been observing.
Monday was day 17 for gold’s daily cycle.

If the dollar were to roll over here, it could help gold resolve this consolidation in a bullish manner.

So some follow through to today’s dollar’s action seems to be the key puzzle piece we are waiting for.