Cycle Trading

Stocks broke below the previous daily cycle low today in a clear and convincing manner forming a failed daily cycle.

The current daily cycle peaked on 9. A swing high formed two days later. Today stocks sliced through the daily cycle trend line and continued lower, closing below the previous daily cycle low in a clear and convincing manner. Today was day 14 for this daily cycle which means we should see another 3 to 5 weeks before the daily cycle low is due. Breaking below the previous daily cycle low confirms that stocks have entered its long awaited intermediate decline.

(There is a small chance that day 28 of the previous daily cycle was actually the daily cycle low making today day 37 and placing it in the timing band for a low)

The intermediate cycle peaked on week 31, locking in a right translated nature to this weekly cycle. It then printed its lowest point on week 33 before rallying. A weekly swing low formed but stocks did not break out to a new high, so therefore I believe that last 2 weeks only set its declining weekly trend line. With this intermediate cycle being so stretched, once a daily cycle low forms, is should signal a new intermediate cycle as well.

Today, the dollar may have entered an intermediate cycle decline.

Today was day 7 for the dollar’s daily cycle. The dollar broke above the 50 day MA only to reverse, losing the 50 day MA and closing below Friday’s low, printing a bearish engulfing candle. A cycle peak on day 7 usually results in a left translated cycle, which fails. And a failed daily cycle will confirm that the dollar’s intermediate cycle is in decline. A break below the recent daily cycle low of 94.30 forms a failed daily cycle.