Cycle Trading

The Dollar
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A peak on day 6 locks in a left translated cycle formation. We should have seen the dollar continue its daily cycle decline and break below 97.21 to form another failed daily cycle.

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The dollar’s decline was halted on Tuesday and a swing low formed on Wednesday. The dollar rallied on Thursday, closing above the 50 day MA. The 3 day rally makes it seem that the dollar has left behind an early, 13 day, daily cycle low. Generally speaking if the dollar has begun its daily cycle decline, any counter trend rally lasting more than 3 days usually signals a new daily cycle. So if the dollar rallies again on Monday then we will label Tuesday as a 13 day, daily cycle low. A clear and convincing close above the upper daily cycle band would indicate that the intermediate cycle low has been left behind.

Stocks
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Stocks broke above the declining trend line and closed above both the 200 MA and the 50 MA last Tuesday to have us label December 14 as a 53 day, daily cycle low.

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Stocks lost the 50 day MA on Wednesday. Stocks also formed a swing high and lost the 200 MA on Thursday which signals a daily cycle decline. This sets up a left translated cycle formation that could lead to the intermediate cycle decline. A break below 1993.26 forms a failed daily cycle and confirms the intermediate cycle decline.

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