Cycle Trading

I was out of the office last week.
This week I will be around more, although technically I am still out of the office.
I would like to begin by stating one of my goals in writing this blog. It is to discuss things about the market that hold my interest. And, conversely, do not write just for the sake of writing. As it turns out, I find something that interests me most days the market is in session.

So after a week off, I eagerly sat down today to write the Weekend Report.
And, as is my want, I like to begin with the dollar.

It looks like the dollar is beginning to reveal its nature.

Last week there was a question of whether or not the previous Friday (7/27) could have been an extended daily cycle low.
Thursday the picture clarified because that candle, day 10, kept below the emerging declining trend line and also clearly printed a lower low.

The current daily cycle broke below the previous daily cycle low and should print its next daily cycle low in 4 – 14 days.

The Schaff Trend Cycle has some interesting points to discuss.

(1) The STC did not at least tag the 25 line, which is very rare for a daily cycle decline.
(2) Notice how the STC breaks above the 75 line, which serves as a secondary
confirmation of a new daily cycle. It then almost immediately reverses.
(3) With the STC below the 25 line and trending lower, that serves as a secondary confirmation of a daily cycle still in decline.

Next, I wanted to look at the bigger picture of the dollar as it emerged from its three year low.
Since the dollar printed its three year low in 5/11 it has been on a relentless march higher.

It seems to me that this rally out of the three year low can be defined by this rally line.

Sure it was breached, but then was regained by a strong recovery.

Now, here is where I got sidetracked.

I began to wonder if this behavior is present in previous three year cycles.

First I want to remind you that I believe that the dollar not only has a three year cycle, but a 15 year super cycle as well that is comprised of five 3 year cycles.

So I looked at the previous 3 year cycle from 2/08 – 5/1, which is the first 3 year cycle of the current 15 year super cycle.

The rally line I observed was not as clearly defined as the current one.
But never the less, I was intrigued, so I looked at some more 3 year cycles.

The next four 3 year cycles can be characterized by a rally line that defines the three year rally.
Notice that the rally generally stays above this rally line.
An occasional dips occurs usually for a yearly low.
But once this trend line is lost and failed to be regained, the dollar begins its journey into a three year low.
It is worth noting that the 92 – 95 three year cycle did not rally have a well defined rally line. It just may because that was the first 3 year cycle for the previous 15 year super cycle.
So, back to the current daily cycle.

As previously stated a day 11 suggests 4 to 14 days to find a bottom.
It seems that the 3 year rally line will fall.
Now if the next daily cycle fails to regain the rally line, then that signals a possible top to the 3 year dollar cycle.

The weekly cycle stands at week 14.

Now we add up a failed daily cycle along with a swing high on the weekly cycle and that signals an intermediate cycle decline.

If the current daily cycle lasts another three weeks, that would bring the weekly cycle to week 17 which is right in the middle of the timing band for an intermediate cycle low.
Keep in mind that right translated weekly cycles can stretch to 23 weeks, so there remains a possibility that this intermediate cycle could still see one more daily cycle.

I am afraid that I am going to have to cut the weekend report off here.

I plan to find time to update the CycleTracker and will post it before Monday’s open.

This dollar detour took more time than I expected, well it could be my fault …