Cycle Trading

The dollar’s daily cycle began on May 1 st and peaked on day 16. Thursday saw the dollar break below the May 1st low which makes this a failed daily cycle.

If Thursday remains as the daily cycle low, then the dollar would need to break above 82.68 in order to form a swing low. Since the dollar is getting late in its timing band, a swing low now has a good chance to mark the daily cycle low. A break of the declining trend line would confirm a new daily cycle

Since a failed daily cycle signals that the intermediate cycle decline has begun, we can expect the next daily cycle form as a left translated daily cycle. Which means is should peak quickly, on or before day 8.

It is very rare (and bearish) for a new intermediate cycle to have its first daily cycle fail. I think that this speaks volumes to problems with the dollar.

Stocks

The daily cycle peaked on day 24 and has been in decline since. Thursday, day 34, stocks printed a reversal candle and tagged the intermediate cycle trend line. Friday a swing low formed along with a break of the declining trend line. That makes Friday day 1 of a new daily cycle.

This is the fifth daily cycle to the current intermediate cycle. Intermediate cycles tend to be comprised of 3 – 4 daily cycles. This is very likely going to be the terminal daily cycle to this intermediate cycle. Therefore our expectation will be for stocks to peak on or before day 20 before rolling over into an intermediate cycle low. This will also likely result in a yearly cycle low.

Our cycle methodology has an expectation of a higher high following a right translated cycle. While I do believe that we will see equities break above the 1700 level before correcting, we need to keep an open mind to other possibilities.

During last year the final daily cycle did follow a right translated daily cycle. But it failed to print a higher daily cycle high before rolling over into a yearly cycle decline.

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