Cycle Trading

We are still waiting on the dollar to decide which way its going.

Starting with the weekly chart, the dollar printed an intermediate cycle low in September.
That cycle peaked at 9 weeks in November and bottomed in December.
In December there was a defined declining weekly cycle trend line.
A weekly swing low at point (a)
And a break of the declining weekly cycle trend line.
Also at point (a) the dollar printed a failed daily cycle.
All of this points to an intermediate cycle low.

The current weekly cycle peaked two weeks later and has been in decline since.
Last week, the weekly cycle broke below the December low, signaling a failed weekly cycle.
A failed weekly cycle is the harbinger for a yearly cycle decline.
A 7 weeks, the weekly cycle still has another 10 – 15 weeks for the timing band to print an intermediate cycle bottom.

So a break above the declining weekly trend line signals that this is probably an extended intermediate cycle out of September.
However, a break below last week’s low of 78.91 means that this is week 7 and the current weekly cycle is continuing its intermediate cycle decline.

Now looking at the daily cycle (starting on the left).
There was a failed daily cycle that printed its low on 12/19.
Following that was a right translated daily cycle.
This is what we would expect for the first cycle of a new intermediate cycle.

The next daily cycle was a failed, left translated daily cycle.
A failed, left translated daily cycle signals an intermediate cycle decline.

Now that the current weekly cycle has a failed daily cycle in hand and being at week 7,
The remaining daily cycles should also be failed daily cycles leading into the intermediate cycle low.

Left translated daily cycles normally peak at or before day 8.

So if the dollar is in a yearly cycle decline, then the current daily cycle should peak by day 8 and roll over and fail.

Equites have responded to this dollar indecision by trading sideways.

Often stocks will print a half cycle low.
That half cycle low then sets the daily cycle trend line.
With Ben flooding the market with QE, this may be all the pull back this cycle sees until its decline into its daily cycle low.

We will have to see if Bernanke can continue to lift the markets …