Cycle Trading

The dollar set a new daily cycle high before printing a bearish reversal on Wednesday.

Wednesday was day 10 for the dollar’s daily cycle. A break below 83.28 forms a swing high and will likely send the dollar into a daily cycle decline. There is already a bearish TSI crossover. The TSI is fairly reliable in helping to spot tops. A day 10 peak favors that this will form as a right translated cycle. But as we discussed on Tuesday, as recently as the previous daily cycle we saw the dollar print a day 16 high that resulted in a failed left translated cycle.

This daily cycle for the dollar has been powerful, resembling a rally out of an intermediate cycle low. Two issues prevent us from labeling this a new intermediate cycle. First that would mean the week 7 marked the intermediate cycle low. That is simply way too early from the normal timing band of about 20 weeks. Second, there has been no confirming declining trend line break on the weekly chart.

Therefore this is week 9 of a failed intermediate cycle. All daily cycles should print as left translated daily cycles until an intermediate cycle low is printed. So even though there is a day 10 peak, this daily cycle should also fail.

If this daily cycle ends up forming as a right translated daily cycle with a higher low, then we would be forced to recognize a shortened 7 week intermediate cycle.

Despite the dollar rallying the last few days, commodities seem to have turned the corner.

It appears that a new daily cycle has begun despite the dollar setting a new daily cycle high. Last Friday was day 20 for the daily CRB cycle. A swing low formed on Monday with a bullish follow through on Tuesday and Wednesday.

The CRB has been caught in a bearish decline since last September. An intermediate cycle low printed in November. Currently, the CRB has been in an extended intermediate cycle decline. The CRB is past the normal timing band for an intermediate cycle low and is also in the timing band for a yearly cycle low.

A weekly swing low has formed off the week 33 low. There is a bullish divergence forming on the weekly TSI. A break above the declining weekly cycle trend line confirms a new intermediate cycle and will likely signal a new yearly cycle.

I believe that oil has already begun a new yearly cycle.

This is a chart that we have been tracking in the Weekend Report. Marked are the yearly cycle lows for oil that has formed in this triangle consolidation. April was month 10 for the yearly cycle.

It tagged the lower stem of the triangle. June formed a monthly swing low and had a bullish MACD crossover.

Commodities are demonstrating signs of life. Oil appears to have begun a new yearly cycle.

A failed daily dollar cycle combined with a bullish break of the declining weekly trend line on the CRB index should provide some …