Cycle Trading

The dollar rocketed higher today gaining over a dollar at the height of the day.

The dollar could not hold on to its gains and was rejected by this resistance level. A break below 80.43 forms a swing high and will likely lead to a left translated daily cycle.

There have been 11 three year cycles dating back to 1978. Out of the 11 three year cycles, four of them printed a three year cycle at 30 months or less. Because of that, we need to recognize that the breach of the three year cycle trend line and a swing low formed at 30 months has a 36% chance of marking the three year low.

However, I believe what we just witnessed was a rejection on the backtest of the three year cycle trend line. Should the daily cycle roll over here and fail, then I believe that we will see a nasty decline into a three year cycle low.

Stocks broke lower today. Thursday was day 21 for the daily equity cycle. The big move down signals that stocks have entered their daily cycle decline. The timing band for a low is between 30 and 45 days. That means that stocks can trend lower for the next 9 to 24 days. And with a peak on day 15, the odds are good to see this cycle form as a left translated daily cycle.

Gold is at an important juncture. Golds daily cycle peaked on day 9. Thursday was day 17. Gold needs to print a daily cycle low by tomorrow to maintain a right translated nature to this daily cycle and have this cycle form a higher low. A break above 1326 forms a daily cycle low and helps gold to maintain its bullish posture.