Cycle Trading

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There are some bearish signals showing up both for the dollar and for stocks.

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Tuesday was day 21 for the dollar’s daily cycle and the dollar once again printed a higher daily cycle high. Yet, today’s bearish reversal along with the True Strength Indicator about to deliver a bearish crossover signal a daily cycle decline is imminent. With the dollar this far into its timing band for a daily cycle low, a swing high has good odds of signaling a daily cycle decline. A break below 84.05 forms a daily swing high.

Stocks also broke lower today.

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Last Thursday the daily equity cycle peaked on day 19. A swing high formed on Friday and then stocks broke lower the past 2 days. Tuesday was day 22 and we see that stocks have managed to close below 10 day moving average as well as close below the previous daily cycle high. Stocks could be declining into a half cycle low but there are some things on the weekly chart that point to a bigger correction.

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Stocks formed a weekly swing high. The weekly TSI has been forming a bearish divergence and is about to deliver a bearish crossover. Which all point to an intermediate cycle decline. Should week 4 remain as the cycle peak, then we could see stocks trend lower for the next 13 to 17 weeks.