Cycle Trading

The Dollar

The dollar printed a huge bearish candle on Thursday, causing it to close below the 10 day MA. This signaled the beginning of the daily cycle decline. But the dollar rallied off of support from the breakout level on Friday to regain the 10 day MA.

While the dollar delivered conflicting signals last week, the TSI have been forming a bearish divergence for the past 4 weeks and now has formed a bearish crossover signaling the beginning of the daily cycle decline. A close below the breakout level would confirm the daily cycle decline.

Stocks

Stocks printed their lowest point on Monday, day 52, placing stocks deep in it timing band for a DCL. A swing low formed on Wednesday.

Stocks closed above both the declining trend line and the 10 day MA on Thursday, which confirms the new daily cycle. I believe that the volatility on Friday can be attributed to the elections next week. Therefore, a close above the 200 day MA would provide added confirmation of the new daily cycle. Stocks are currently in a daily downtrend. They will remain in its downtrend unless they close above the upper daily cycle band.

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