Cycle Trading

The Dollar

The dollar continued to rally this week to close above the 200 day MA. Closing above the 200 day MA helps to affirm my belief that the dollar printed a shortened YCL in February.

The dollar printed its highest point on Friday. However, Friday’s bearish reversal eases the parameters for forming a swing high. A break below 92.19 will form a swing high. A close below the 200 day MA will signal that the daily cycle is in decline. The dollar is in a daily uptrend. It will remain in its uptrend unless it closes below the lower daily cycle band.

Stocks

Stocks printed its lowest point on Thursday, day 23. That is 7 days shy of its normal timing band for a daily cycle low.

Stocks formed a swing low on Friday. So a case can be made that Friday was a half cycle low. However, I am in the camp that Friday was a daily cycle low. Part of my thinking is that in real time the decline into the day 17 low did not turn the 10 day MA lower. But the decline into the day 23 low did turn the 10 day MA lower.

The other reason why day 23 could be the daily cycle low is how stocks have been behaving at the 200 day MA for this bull market.

Looking back over the past several years it is undeniable that stocks have been in a bullish uptrend. The only times that stocks spent any significant time below the 200 day MA was during the previous 4 year cycle declines. Otherwise stocks have been finding support at the 200 day MA. Since stocks are only 2 years into the current 4 year cycle, there is still plenty of time to rally higher. Therefore that shifts the odds towards the 200 day MA providing support for an early 23 day, daily cycle low.

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