Cycle Trading

The Miners broke out above the previous daily cycle high on Monday. This is bullish behavior confirming that the Miners are in a daily uptrend.

I have received some emails asking whether or not day 21 was the DCL. Since the daily cycles have been stretching, I have been in the camp that day 21 was a half cycle low. But using our cycle band tool allows us to focus on the uptrend instead of the daily cycle count.

The Miners closed above the upper daily cycle band and the 200 day MA on 7/26 to deliver the first indication that the Miners were beginning a daily uptrend. The Miners soon retraced some of that move and formed a half cycle low on day 21. Since the Miners did not close below the lower daily cycle band they remained in their daily uptrend. The Miners closed back above the upper daily cycle band on 8/10 to affirm the new daily uptrend. The Miners will continue in its daily uptrend until it closes below the lower daily cycle band.

What I believe is, in part, driving the Miners higher is the falling dollar.

The dollar broke below the previous daily cycle low on Friday to form a failed daily cycle. On Monday they delivered bearish follow through by breaking lower. Monday was day 18 for the dollar’s daily cycle. The dollar’s daily cycle has been stretching of late where 8 of the last 10 daily cycles stretched past 30 days, with the most recent stretching to 50 days.

Here again we can use our cycle band tool. The dollar has been in a punishing downtrend characterized by peaks below the upper daily cycle band and troughs below the lower daily cycle band. The dollar will remain in its daily downtrend until it closes above the upper daily cycle band.