Cycle Trading

The dollar is still consolidating the big spike down a week later from FED day.

The dollar has delivered a trend line break that signals a new daily cycle. However, day 21 was the lowest point since the day 12 peak. We need to see a swing low form off the day 21 candle for a daily cycle low. We have see plenty of dollar anomalies this past year so we will need to keep an open mind to the cycle count. What is clear is that the dollar did break below the previous daily cycle low on day 21. That signals that the dollar is in an intermediate cycle decline.

The picture on the Miners also is not clear.

Was the day 25 candle a daily cycle low? Probably. Could Tuesday have been an extended daily cycle low — possibly. I am leaning toward Wednesday being day 8 of a failed daily cycle. Any bounce here should roll over into an intermediate cycle decline. The bullish divergence developing on the TSI suggests we should keep an open mind. But the weak close after testing the 26 level on Wednesday has me concerned.

Stocks have been in decline for 5 days now. Our framework expects a left translated cycle to develop. A break below the daily cycle trend line will confirm the daily cycle decline. This is also the timing for a half cycle low. We could see a bounce here that does not break the daily cycle trend line and goes back to test the recent high.