Cycle Trading

The Dollar

The dollar broke below the June daily cycle low on Tuesday then delivered bearish follow through on Wednesday and Thursday.

The dollar printed its lowest point on Friday, day 15, which would be early to expect a DCL to form. The dollar formed a narrow range candle on Friday, which eases the parameters for forming a daily swing low. And considering the brutal selloff this week (down 2.3%) that may have exhausted the selling. A swing low and close above the 10 day MA would signal a new daily cycle. The dollar is currently in a daily downtrend. The dollar will remain in its daily downtrend unless it closes back above the upper daily cycle band.

Stocks

Stock did not turn the 10 day MA lower as they printed the day 35 low — causing the status of the daily cycle to be unclear.

While stocks broke out to a new daily cycle high on Friday – there are bearish divergences that are persisting on the oscillators.  So we need to keep an open mind that Friday is day 48 of a stretched daily cycle.   A swing high and close below the 10 day MA will signal the daily cycle decline.  Stocks are currently in a daily uptrend.  They will remain in their daily uptrend unless they close back below the lower daily cycle band. 

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