The 11/22/13 Weekend Report Preview

So our primary framework has the dollar declining into its three year cycle low. And therefore our expectation is to see left translated weekly cycles. If this weekly cycle has, in fact, peaked then we would expect to see left translated daily cycles.

The previous daily cycle was the first daily cycle of a new intermediate cycle so therefore it should have formed as a right translated cycle, and it did. That cycle peaked on day 10 and declined until Wednesday, November 20th where it printed a daily cycle low and broke the declining trend line. Thursday provided some follow through, but then the dollar reversed. Friday the dollar formed a swing high.

While we are expecting a left translated cycle, it appears that this is an extremely left translated cycle that peaked on day 1. A break below 80.53 forms a failed daily cycle and confirms the daily cycle decline.

Stocks

Stocks began a brief decline on Monday. Wednesday was the lowest point after the Monday peak. A swing low formed on Thursday and then stocks broke out to new highs on Friday.

So was this a daily cycle low? Normally we see a daily cycle correction last 7-15 days. Usually the 5 Day RSI gets oversold at most daily cycle lows. And we see a Bollinger Band breach. All of which did not happen here.

The decline into Wednesday did break the daily cycle trend line. With Wednesday being day 30, we have a trend line break and a low that printed in the timing band for a daily cycle low.

So while not all of the criteria has been satisfied for for a daily cycle low, the trend line break and a swing low in the timing band has me thinking day 30 was the daily cycle low. Still it would be prudent to keep an open mind to Friday being day 32 instead of day 2.

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2 responses to “The 11/22/13 Weekend Report Preview”

okratrader

November 24, 2013

Do cycle lows always occur at the lowest low (Nov 20 on dollar) or do they allow for a slightly higher low (say at Nov 22 if the dollar move upward form there). What about a hypothetical example where it forms a lowest low on day 10 but a slightly higher low on day 20?
I’m curious of the rules behind defining a cycle low?

1. likesmoneystudies
  
  November 24, 2013
  
  okratrader,
  
  I define a cycle low as the lowest point following the cycle peak. The trend line break adds to our confidence that 11/20 was the daily cycle low.
  
  If the dollar (hypothetically) forms a higher swing low then that would help to define the daily cycle trend line.
  
  As far as the “rules” , I tell you what has served me well.
  
  – The cycle low is the lowest point following the cycle peak.
  – The cycle low occurs in the timing band for a low.
  – A declining trend line break confirms the cycle low.
  
  I hope that this helps.
  
  LM

Cycle Trading