Cycle Trading

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The dollar’s daily cycle peaked on Wednesday, which was day 25. A swing high formed on Thursday with more bearish follow through on Friday, day 27.

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The dollar’s timing band for a daily cycle low runs from day 18 to day 25. So by Friday the dollar’s daily cycle was beginning to get stretched. Since it is so late in the dollar’s daily cycle, the reversal left behind on Friday could make the daily cycle low — if there was a daily cycle trend line break. We have been watching for a break of the dashed daily cycle trend line to confirm the daily cycle decline, which hasn’t happened.

However, the dollar has broken below the accelerated (red) daily cycle trend line. With the dollar potentially rallying out of a 3 year low, perhaps this is the only correction that we will see here.

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If the dollar breaks above the developing declining trend line then that will signal that Friday marked the daily cycle low. A break above last Wednesday’s high of 81.78 will confirm the dollar’s new daily cycle.

Keep on mind that this is week 14 for the intermediate dollar cycle. One more daily cycle should escort the dollar right into its timing band for an intermediate cycle low. Therefore we will need to watch for a left translated daily cycle developing once a new daily cycle is confirmed.

Stocks provided some bullish follow through to the swing low that printed on Friday.

Stocks managed to regain the 10 day MA today.

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Regaining the 10 day MA provides more confirmation that Thursday marked the daily cycle low. The weak close along with the 67 million Selling on Strength that printed today suggests more volatility ahead for stocks.