Cycle Trading

The Dollar

The dollar formed a bearish reversal on Wednesday.

Wednesday was day 38 for the daily cycle. That places the dollar late in its timing band for a daily cycle low. While the dollar formed a swing high on Thursday, it did not deliver any bearish follow through. A break below the daily cycle trend line will signal the daily cycle decline. The dollar is in a daily uptrend. The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.

Stocks

Stocks broke out to new all time high on Friday.

The day 20 low looks like a DCL. Stocks even retraced past the 61 % Fib level. However, 20 days is really too early for a DCL. However, the day 20 low may act as a DCL. If stocks are entering into a melt-up phase then cycles may become erratic and we will need to rely on our cycle band tool. What is clear is that stocks are in a daily uptrend. They will remain in their daily uptrend unless they close below the lower daily cycle band.

This is week 20 for the intermediate cycle and we should be watching for signs of a left translated daily cycle formation. However, breaking out to new highs indicates that a possible melt-up scenario is back in play.  Stops can be raised to 4393.66.

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