Cycle Trading

The dollar delivered an upside surprise today.

So after a bearish reversal on Monday, the dollar surprised us by reversing again.

Tuesday was day 5 for the daily dollar cycle. Recall that the previous dollar daily cycle was a left translated daily cycle that failed. A failed daily cycle signals that the intermediate cycle is in decline creating the expectation of lower highs and lower lows with the remaining daily cycles to be left translated cycles.

So the dollar will need to peak by day 8 and really should not break above 83.30. Breaking above 83.30 makes a new daily high. And rallying past day 8 increases the possibility of this becoming a right translated daily cycle.

So while the dollar gave an upside surprise, bonds broke lower.

Tuesday was day 8 for the daily bond cycle. Following a right translated daily cycle the task for bonds was to print a higher daily cycle high, which was accomplished today. The bearish engulfing candle may signal that the daily cycle has peaked.

What I find interesting was that Stocks were up today while the dollar was up, but maybe stocks were up because bonds were down …

Over the past couple of months it seems as though equities and bonds are mirror images of each other. For instance, 2/26 was the equity daily cycle low and the same day it was also the daily cycle high for bonds.

Stocks rallied as bonds printed their cycle low. Then when bonds peaked on 2/05 stocks printed a low that looks like a daily cycle low in real time.
As bonds declined into their daily cycle low stocks rallied into their daily cycle peak.

As bonds rallied out of thier daily cycle low, stocks declined into their DCL. Then today as bonds reversed, stocks had a big day up. If this continues we will likely see a swing high on bonds as stocks continue to rally out of their DCL. And if the dollar does rollover by day 8,
that will likely add fuel to the fire …