Cycle Trading

The dollar printed its lowest point on Thursday, day 53, placing it very deep in its timing band for a DCL.

The dollar formed a swing low on Friday that closed convincingly above the 10 day MA to signal the new daily cycle. The dollar is currently in daily downtrend. But a close above the upper daily cycle band will end the daily downtrend and begin a new daily uptrend.

The dollar is very deep in its timing band for the daily cycle low, the weekly cycle low and the yearly cycle low. The expectation for the first cycle of a lower order should is it should right translate. Meaning the first daily cycle of a new weekly cycle should right translate. And, the first weekly cycle of a new yearly cycle should right translate. The first daily cycle could rally for 3 – 4 weeks plus before topping. The first intermediate cycle could rally for 12 – 15 weeks plus before topping — which will likely pressure stocks and precious metals.

As we noted on Friday, the Dow already formed a higher high in January and is working on forming consecutive higher highs. 

The Transports convincingly formed a higher high this week to confirm a Dow Theory trend change.

Ib the Weekend Report I discuss how the dollar rallying potentially out of its yearly cycle low can affect stocks as they appear to be rallying out of their 4 year cycle low.