Cycle Trading

The dollar declared its intentions of forming a right translated daily cycle on Wednesday.

The dollar initially broke below the (grey) trend line drawn off the 2/13 candle, then reversed higher.
At 14 days, the dollar as another 4 -14 days to find a daily cycle low.

Equities started selling off on the dollar strength.

Stocks are on day 34 of the daily equity cycle.
They are in the timing band to seek out a daily cycle low and should print a low in over the next 11 days.
I expect equities to continue to correct as the dollar rally continues.

The overlap of the dollar having 4 – 14 days to seek a low and 11 days for equities to print a low could see stocks printing their daily cycle low on the outer timing band of around 45 days.

There is a gap that could get filled under that type of scenario.

A dollar rally for another 10 days could fuel the equity sell off to see a gap fill at around the 1426 level.

Gold and the Miners got hammered and and are both in failed daily cycles.

I plan to update my cycle charts for the Weekend Report in these two areas.

What I found interesting yesterday was the CCI Index.

Lets start with the yearly cycle.

The CCI Index printed a yearly cycle low last June.
The yearly cycle peaked 3 months later in September and has been in decline since.
January is the lowest point (so far) following the September peak.
Although hard to see here, February has printed a higher monthly high and so far has remained above January’s low.
So unless the January’s low is taken out, a monthly swing low has formed.
And a monthly swing low is the prerequisite to begin a new yearly cycle.

So on Wednesday with the dollar surge and precious metals being hammered I would have expected the January low to be taken out.
What I find interesting is a reversal candle printed on the CCI.
So if January is the yearly cycle low then the current daily cycle decline should form a low above the January low of 549.44.

That can all change if the CCI continues lower and breaks below the January low.

However, a break above 553.51 forms a swing low.

And possibly shows a light at the end of this tunnel…