Cycle Trading

The dollar provided some bullish follow through to yesterday’s declining trend line break. The bullish follow through all but confirms a new daily cycle.

Tuesday was day 2 for the new dollar cycle. The dollar is still being contained by the 50 day MA and the upper daily cycle band. As long as the dollar remains below the upper daily cycle band, then the dollar will remain in a daily down trend. A close above the upper daily cycle band will confirm that the dollar is in a new daily cycle, it will also indicate that the dollar has begun a new intermediate cycle as well.

Stocks also delivered some follow through today.

The daily equity cycle peaked last Thursday on day 17. Stocks close below the lower daily cycle band on Friday indicating that stocks have begun its daily cycle decline. The bearish follow through today broke below the daily cycle trend line in a clear and convincing manner to provide more confirmation of the daily cycle decline. The 756 million BOW today might mean that we see a counter trend rally. Any rally now should be brief, but the expectation is for stocks to print a lower daily cycle low.