Cycle Trading

So the dollar rallied to a new daily cycle high on Tuesday.

Today was day 9 for the daily dollar cycle. By breaking to a new daily cycle high, the dollar has shifted the odds to forming this daily cycle as a right translated daily cycle. If this does turn out to be a right translated daily cycle that would also signal that this is a new intermediate cycle.

The April pivot marked a 13 week right translated intermediate cycle low. Five weeks later the dollar breaks below the April pivot signaling a failed weekly cycle which confirms the yearly cycle decline.

Then on week 7 the dollar explodes higher. The strength of this does look like an intermediate low was left behind on week 7. The big concern is that at 7 weeks — this is way too early for an intermediate cycle low to print.

However, what we are watching on the weekly chart is the declining weekly cycle trend line. A break above that signals a new intermediate cycle. A break above the May swing high would signal that a yearly cycle low has been left behind in May.

The yearly cycle shows us that the dollar peaked in April, which was month 8. A swing high was formed the next month. Since May’s monthly candle closed near the highs, with the long lower wick, that eases the parameters to form a monthly swing low. Well the dollar now sports a monthly swing low.

So it is certainly possible that a yearly cycle low was left behind in May. I will point out that May is month 26 of the three year dollar cycle. If May does turn out to be a yearly cycle low, I would expect the new yearly cycle to roll over soon into a left translated yearly cycle leading into the three year cycle low.

There is still another possibility. The current daily cycle may still yet form as a left translated daily cycle. I know that we just acknowledged that daily cycles tend to peak by day 8. Each passing day past day 8 increases the odds of this cycle forming as a right translated daily cycle.

Well we do not need to look any farther than the previous daily cycle to counter that argument. The previous daily cycle printed a day 16 peak. Then the dollar went on to print a 35 day failed daily cycle.

So until either the dollar breaks above the declining weekly cycle trend line declaring a new intermediate cycle or the dollar forms a swing high and continues into its yearly cycle decline —– the jury will be out …