Cycle Trading

The dollar ended last week forming a weekly swing high that followed the tag of the 50 week MA.

The weekly swing high signaled that the beginning of the intermediate cycle decline. This also aligned with our longer term view of the dollar declining into its 3 year cycle.

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The dollar began the day on Thursday by breaking below the day 36 low. At first it appeared that the new daily cycle was rolling over on day 4.

Then boom.

The dollar began to rally and closed near the high of the day to print a bullish engulfing candle. This extends the daily cycle decline to make Thursday day 41 of an extended daily cycle. The below the bullish engulfing candle eases the parameters for forming a swing low. A break above 94.61 forms a swing low to confirm the new daily cycle. The dollar is in a daily uptrend. It will remain in its uptrend unless it closes below the lower daily cycle band.

The dollar certainly surprised us with its bullish print on Thursday. Since surprises tend to arrive on the side of the trend, Thursday’s dollar surprise clearly indicates a bullish trend. In the Weekend report I plan to discuss what Thursday’s bullish surprise means on the longer term 3 year cycle . And what would need to happen to cause us to change our longer term 3 year cycle framework.