Cycle Trading

The Dollar

The dollar closed below the day 37 low on Friday.

Closing below the day 37 extends the daily cycle decline which makes Friday day 40. That places the dollar deep in its timing band for a DCL. A. swing high and close above the declining trend line will signal the new daily cycle. The dollar is in a daily downtrend and will remain so unless it can close back above the upper daily cycle band.

Something to keep in mind once the DCL has formed is that this is now week 15 for the intermediate cycle. The dollar will likely need one more – left translated daily cycle in order to complete its intermediate cycle decline.

Stocks

Stocks printed a higher high on Friday.

The higher high on Friday locks in a right translated daily cycle formation. At 35 days, that places stocks in their timing band for a daily cycle low. A break below Tuesday’s low of 4118.38 will signal the daily cycle decline. However, stocks have been going vertical since the March DCL.

One strategy is be to use Tuesday’s low of 4118.38 as a stop. If stocks close above Friday’s high of 4194.17 then Friday’s higher will become the stop. Another strategy one could use is a swing high and break below the accelerated trend line to signal the daily cycle decline.  As stocks continue to get stretched above the 200 day MA, once a correction begins — it will likely be violent. A third strategy would be to decide to lock in profits early and wait for the next cycle low.

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