Cycle Trading

The Dollar

The dollar closed above the declining trend line on Monday to confirm the new daily cycle.

The dollar continued higher, closing above the 50 day MA and the upper daily cycle band on Wednesday. That ends the daily downtrend and signals that day 26 also hosted the intermediate cycle low. The dollar then printed a bearish reversal on Thursday and followed up by forming a daily swing high. A close back below the 50 day MA will signal that the dollar has begun its daily cycle decline.

Stocks

Stocks made a brief 3 day decline resulting in a close below the 10 day MA on Monday. Monday was only day 24, which is too early for a daily cycle low. And since that decline did not manage to turn the 10 day MA lower, we will label Monday as a half cycle low.

With Monday being the half cycle low, that allows us to construct the daily cycle trend line. Now a swing high and break below the daily cycle trend line will confirm a daily cycle decline. But the new high on Friday locks in a right translated daily cycle formation. Stocks are in a daily uptrend and will remain so until they close below the lower daily cycle band. The strategy in a daily uptrend is to buy the dips.

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