Cycle Trading

The Dollar

The dollar closed back above the upper daily cycle band on Friday to confirm that day 24 hosted the DCL which makes Friday day 5 of the new daily cycle.

The dollar established a daily uptrend prior to the drop into the daily cycle low. By closing back above the upper daily cycle band on Friday affirms the daily uptrend. The dollar will remain in its uptrend until it closes below the lower daily cycle band.

Stocks

Stocks formed a swing low on Friday and appear to have begun a new daily cycle.

A decline into a daily cycle low normally lasts 7 to 15 days. The peak on day 40 is an extremely right translated daily cycle formation which does not leave much time in the normal timing band for a normal daily cycle decline. We also discussed how the behavior of previous 2 intermediate cycle has changed because they did not produce a failed daily cycle. Unless proven otherwise this change in behavior is filtering down to the daily cycle level as evidenced by the 1 day decline into a daily cycle low.

Part of our evidence that stocks printed a 1 day daily cycle decline is that both the Russell and the transports delivered a more recognizable daily cycle decline. All three have formed swing lows and closed back above their respective 10 day MA’s to signal new daily cycles. Stocks are in a daily uptrend. They will continue in their daily uptrend unless they close below the lower daily cycle band.

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