Cycle Trading

The dollar has been in an intermediate cycle decline since mid-July printing 4 consecutive failed daily cycles.

Friday was day 16 for the current dollar cycle. The dollar is 2 days shy of its normal timing band for printing a daily cycle low. A break above 79.32 forms a daily swing low. Then a break above the declining trend line signals a new daily cycle.

You will notice that the 79 level has been a level of support for the dollar over the past 2 years. Also notice that the True Strength Indicator has hit a level where previous daily cycles were triggered. I think that its likely that we will see a low formed in the early part of the dollar’s timing band.

Stocks

The daily equity cycle sits at a new all time high on day 12.

The True Strength Indicator appears to have started to roll over and is forming a bearish divergence. A TSI bearish divergence signals an impending decline.

This is the third daily cycle of an aging intermediate cycle. Our cyclical expectation is for this daily cycle to form as a left translated cycle, failed daily cycle. Left translated equity cycles normally peak on or before day 20. Which means that we are on the look out for a daily swing high this week.

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