Cycle Trading

The Dollar

The dollar continued to rally this week, closing at its weekly high on Friday.

Friday was day 26 for the daily dollar cycle. That places the dollar in its timing band to seek a daily cycle low. A swing high at this point should signal that start of the daily cycle decline. The dollar has been closing above the upper daily cycle band to establish a daily uptrend. The dollar will remain in the daily uptrend until it closes below the lower daily cycle band.

Stocks

Stocks formed a daily swing low on Friday.

The daily swing low that formed on Friday is still 6 days shy of the normal timing band for a daily cycle low. Stocks broke below their previous daily cycle low on Thursday, forming a failed daily cycle. With the technical level of support from the previous daily cycle low broken, we should see 7 to 10 days of panic selling before stocks print their final daily cycle low.

But we need to keep an open mind that an early daily cycle low formed on Thursday. Since the last daily cycle was a bit extended at 53 days it is reasonable to see a slightly shortened daily cycle here, which would balance out the daily cycle counts. We would need to see a break of the declining trend line to confirm a new daily cycle.

Even if stocks began a new daily cycle on Thursday, any rally would likely be short lived. The weekly charts indicate that stocks are too early in their weekly cycle for an intermediate low to print. Also there has been no large Buying on Weakness numbers that is usually prints preceding an intermediate cycle low.

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