Cycle Trading

Dollar

The dollar broke bearishly out of consolidation on Wednesday to close below both the 10 day MA and the 200 day MA. 

The dollar delivered bearish follow through on Thursday by closing convincingly below the day 26 low to cause a bit of uncertainty with our daily cycle count. Breaking below the day 26 low could indicate that Thursday was day 11 of a failed daily cycle.  But the bullish divergence on the oscillators indicate a continuation of the daily cycle decline, making Thursday day 37 of a stretched daily cycle. The dollar formed a bullish reversal on Friday, easing the parameters for forming a DCL.  A swing low and close above the day 26 breakdown level will signal a new daily cycle. A break above 102.42 will form a swing low.  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

Stocks broke bullishly out of consolidation on the previous Friday and continued higher into Thursday.

Thursday was day 33 for the daily cycle. That places stocks in its timing band for a daily cycle decline.  Stocks are beginning to get stretched above the 10 day MA. We need to keep in mind that breakouts that occur late in the daily cycle are often not sustained.  A swing high and close below the 10 day MA will signal the daily cycle decline. A break below 4704.69 will form a daily swing high. Stocks are currently in a daily uptrend. Stocks will remain in its daily uptrend unless they close below the lower daily cycle band. 

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