Cycle Trading

Tuesday was day 13 for the dollar’s daily cycle.
The dollar should have another 5 to 12 days left to find its daily cycle low.
However, the dollar is starting to get a tad oversold and could bounce along the way.

When the dollar is oversold, RSI 5 at 30 or below, and it tags the lower Bollinger band, the dollar usually bounces from there.

Since there is still another 5 days until the timing a band for a low, any bounce should be temporary.

The possibility exists that any bounce could result with a tag of the declining cycle trend line before the dollar makes its final push into a daily cycle low.

The Selling on Strength numbers seem to support this notion.

The SPY had over 200 million selling on strength.
A dollar bounce here would be congruent with equities taking a quick breather as it approaches the top of its current channel.

Any pullback from the channel top is likely to be brief until the dollar prints its daily cycle low.

And now a quick look at bonds.

TLT is on week 20 of the intermediate cycle.
I want to point out that out of the 15 right translated weekly cycles since 2002,
only three of the have exceeded 20 weeks.

And since TLT is in the timing band for an intermediate cycle low, it will be interesting to see if the October pivot can halt TLT’s decline at 20 weeks.

As usual, I feel it pays to look at the current day’s action as we look ahead …