Cycle Trading

The Dollar

The last time the dollar delivered clarity for a daily cycle low was the September DCL.

Since the September low, the dollar has been firmly in a daily uptrend. Assuming that day 25 was the DCL, that sets up a possible left translated daily cycle formation for the dollar. A break below the daily cycle trend line would signal the daily cycle decline.

Stocks

Following the day 7 peak, stocks closed below both the 200 DMA and the 10 DMA and turned the 10 DMA lower to indicate that stocks were declining into a daily cycle low.

I am not comfortable labeling day 18 as the DCL. However, cycles often will balance out an extended daily cycle with a shortened cycle and the previous cycle did extend out to day 52. Setting aside the daily cycle count, the day 18 low does satisfy the other criteria for a DCL. But due to the proximity of the 200 DMA and the 50 DMA, I would like to see a close above these two moving averages for confirmation of the DCL.

Stocks delivered a signal Friday for more volatility. Stocks printed 616 million Selling on Strength on Friday. Stocks are in a daily downtrend and facing resistance from both the 200 MA and the declining 50 day MA. Rejection by the 200 MA would indicate that day 18 was a half cycle low.

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