Cycle Trading

The dollar  formed a swing high on Tuesday, closing below the 10 day MA.

The dollar went on to close below the 50 day MA on Wednesday — however the dollar did not deliver any bearish follow through.  

Instead, the dollar rallied on Thursday and Friday. The dollar closed back above the 50 day MA – turning the 10 day MA higher.  It appears that the dollar has started to form a triangle consolidation pattern. The dollar is currently in a daily uptrend. The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.

Stocks were rejected by the 6100 level the previous Friday. They were again rejected by the 6100 level this past Friday. Stocks also closed below the 10 day MA on Friday to signal the daily cycle decline.  The peak on day 8 sets up a left translated daily cycle formation.  Stocks should go on to break below the day 14 low of 5923.93 in order to complete its daily cycle decline. A break below the previous DCL of 5773.31 will form a failed daily cycle. 

However, there is one other scenario we need to consider.

Stocks appear to forming a triangle consolidation, which can obscure our daily cycle counts.  What is clear is that stocks are currently in a daily uptrend.  Stocks will remain in its daily uptrend unless they close below the lower daily cycle band. 

In the Weekend Report I discuss the longer term scenarios based on these consolidations.