Cycle Trading

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The dollar’s daily cycle peaked on day 7. It was rejected by the 50 day MA and began its daily cycle decline. The dollar broke below the previous daily low on day 17 to from a failed daily cycle.

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After printing an inside day on Wednesday the dollar printed a bullish reversal on Thursday. That has eased the parameters for forming a swing low. At day 19 the dollar is in its timing band for a daily cycle low. A break above 79.49 forms a swing low. Then a beak above the declining trend line confirms a new daily cycle. But something more significant than a daily cycle low might have occurred.

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The dollar has been consolidating in a weekly triangle pattern since September. In real time it looked as if the dollar printed an intermediate low in March. Today the dollar broke below that low. So either this is now a failed intermediate cycle on week 8, or an extended intermediate cycle at week 28. Since triangle consolidations can obscure cycle counts I think that this is an extended intermediate cycle. But not only did the dollar break below the March pivot, it broke below the October pivot as well.

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The three year dollar cycle peaked in July at month 26. The lowest point following that July peak was October, until today. The dollar broke below the October pivot today. Since the dollar is at its lowest point since the three year peak, by definition, it is in the process of finding its three year cycle low.

Historically speaking, the dollar prints a three year low every 35.5 months. The dollar is currently in month 36 of its three year cycle. So confirmation of a new daily cycle could also mean a new intermediate cycle, new yearly cycle and a new three year cycle.