Cycle Trading

The dollar was halted by the 50 day MA on Thursday. Friday’s swing high caused the dollar to close below the 10 day MA to signal the daily cycle decline. The dollar has been in a daily downtrend. Friday’s swing high formed below the upper daily cycle band to indicate a continuation of the daily downtrend.

Stocks

Stocks have begun a new daily uptrend. They will remain in their uptrend unless they close below the lower daily cycle band.

Stocks closed above the 50 day MA the previous week. Then back tested the convergence of the 50 day MA and the 10 day MA this week. Since this is a new intermediate cycle we are expecting this daily cycle to right translate. With Friday being day 20, a break above the day 16 high of 2675.47 will shift the odds toward a right translated daily cycle formation.

However there are some concerns that are developing. Stocks printed a large 624 million Selling on Strength on on Thursday. That was followed by 481 million Selling on Strength on Friday. There are also bearish divergences that are beginning to emerge on the oscillators. A break below the daily cycle trend line will signal the daily cycle decline.

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