Cycle Trading

As we previously discussed, the dollar tanked last Wednesday, Fed Day.

Since Fed Day, Day 21, the dollar has given a weak bounce. Last Wednesday was the lowest point of the cycle. We are waiting for the dollar to either break above 81.22 to form a daily cycle low. Or the dollar needs to break below 80.06 to continue its daily cycle decline.

Even though gold was down today, it still maintains a bullish posture.

Gold is emerging from its recent daily cycle low. As long as gold does not break below last Wednesday’s low, then gold remains in an uptrend. A break below Wednesday’s low signals that gold has entered its intermediate cycle decline.

Stocks have closed lower for three straight days.

Our framework is calling for a left translated daily cycle to form. So far equites are obliging. We still need to wait for a break of the daily cycle trend line to confirm that the daily cycle has entered its primary decline.

And now I want to draw your attention to Bonds

Bonds have been caught in a yearly cycle decline printing lower highs and lower lows.
Then on Sept. 11 bonds printed a bullish reversal and have been trending higher.

The reversal on Sept 11 was the first higher low since April. Monday was day 8 and bonds set another high for the current daily cycle. A break above 106.68 forms a higher high and signals a change in trend. Should bonds will break above 106.68 during the current daily cycle then waiting on the next daily cycle low should provide a good low risk entry.

That will be something worth keeping an eye on …