Cycle Trading

The dollar formed a swing low and closed above the 10 day MA on Wednesday to signal a new daily cycle. The dollar will need to regain the 10 MA and close above the declining trend line in order to confirm the new daily cycle. Currently, the dollar is in a daily downtrend.  It will remain in in its daily downtrend unless it closes above the upper daily cycle band. 

Stocks

Stocks closed below the 10 day MA on Thursday and delivered bearish follow through by closing below the daily cycle trend line on Friday to confirm the daily cycle decline.

With stocks being extremely late in its timing band for a daily cycle low, we were expecting a short, but violent, daily cycle decline. And that appears to be what is enfolding. Friday saw stocks break below the 38 fib level then form a bullish reversal. A break above 3479.15 will form a swing low to signal a new daily cycle. Stocks are still in their daily uptrend. So if a swing low forms above the lower daily cycle band — then stocks will remain in their daily uptrend and trigger a cycle band buy signal.

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