Cycle Trading

The Dollar

The rally into the day 17 high caused the dollar to become stretched above the 10 day MA. This week’s consolidation allowed the 10 day MA to catch up to price.

Friday was day 22 for the dollar’s daily cycle. That places it in the early part of its timing band for a daily cycle decline. The dollar is in a daily uptrend. A bullish break above this week’s consolidation would indicate a continuation of the daily uptrend and trigger a cycle band buy signal. But a close below the converging 200 day MA and 10 day MA would signal the daily cycle decline.

Stocks

Stocks formed a swing low on Monday and continued higher into Friday, confirming the new daily cycle.

We need to be aware that stocks are late in their timing band for a yearly cycle decline. So at this point, a left translated daily cycle will likely lead to the YCL. RSI is approaching overbought. If it embeds in overbought then stocks will be resuming their intermediate cycle advance. However, a bearish reversal would be a warning of a potential left translated cycle formation.

While stocks are in their timing band for a YCL, stocks did close above the 4240 level and is beginning to deliver bullish follow through. This can lead to a bullish trending move, which would stretch the yearly cycle. The 4240 level will be the stop.

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