Cycle Trading

The Dollar 

The Fed decision to raise rates caused the dollar to break out to a 20 year high.  

Friday was day 30 for the dollar’s daily cycle.  The new high on day 30 locks in a right translated daily cycle formation.  30 days also places the dollar in its timing band for a daily cycle decline. The dollar will need to form a swing high and break below the accelerated (dashed) trend line to signal the daily cycle decline. The dollar is currently in a strong daily uptrend.  The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.  

Stocks 

When stocks undercut the day 54 low last Friday, the bullish divergence on the oscillators indicated a continuation of the daily cycle decline.

When stocks formed a swing low on Monday it looked, in real time, that the undercut-extended daily cycle low scenario was valid. Then stocks were rejected by the breakdown level on Wednesday then delivered bearish follow through on Thursday and Friday. Therefore we will label day 54 as the DCL, making Friday day 13 of a failed daily cycle. And losing the breakdown level signals that stocks have entered a bloodbath phase. A break below the previous DCL of 3636.87 will form a failed daily cycle to signal the intermediate cycle decline.  

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