Cycle Trading

The Dollar

The dollar formed a swing high on Thursday and then delivered bearish follow through on Friday to signal the daily cycle decline.

Friday was day 29, placing the dollar in its timing band for a DCL. The dollar needs to close below the 10 day MA as a first confirmation that the daily cycle is in decline. Then the dollar needs to break below the (black) daily cycle trend line before it can complete its daily cycle 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 formed a swing low on Thursday and closed back above the 10 day MA on Friday to signal a new daily cycle.

Stocks were in their 4th daily cycle. Intermediate cycles normally are comprised of 3 to 4 daily cycles. Therefore we were expecting to see a failed daily cycle to usher in the intermediate cycle decline. Stocks printed their lowest point on Wednesday, day 33, placing stocks in their timing band for a daily cycle low. It concerns me that the decline did not cause the 10 day MA to turn lower. I suspect that the Fed intervened to prevent stocks from gaining any bearish momentum that would have lead to a failed daily cycle. So unless something happens next that changes my mind, we will label Wednesday as the DCL. Meaning that stocks are now in their 5th daily cycle.

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