Cycle Trading

The Dollar

The dollar printed its lowest point on Wednesday, day 28, placing it in its timing band for a DCL. 

The dollar formed a bullish reversal on Wednesday off support from the 50 day MA. However, the dollar did not deliver any bullish follow through. Instead, the dollar was contained by the declining 10 day MA on Thursday then broke lower on Friday. The dollar is now being squeezed by the declining 10 day MA and the 50 day MA.   A break above 104.72 will form a daily swing low to signal the new daily cycle. But a break below the day 28 low of 103.05 will extend the daily cycle decline.

Stocks

Stocks printed their lowest point on day 53, placing them very deep in their timing band for a DCL. Stocks formed a swing low on Tuesday, then closed above the converging 10 day MA and 200 day MA on Thursday to signal the new daily cycle. However, stocks closed back below both MA’s on Friday — raising the possibility that the DCL has not yet formed.  

If stocks deliver bearish follow through to break below the day 53 low of 3808.86, that will extend the daily cycle decline. Stocks will need to close back above both the 200 day MA and the declining 10 day MA label day 53 as the DCL. Stocks will still need to close above the 50 day MA in order for any rally to be sustained. Stocks are in a daily downtrend. They will remain so unless they can close back above the upper daily cycle band.

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