Cycle Trading

The dollar has recently established a pattern of higher highs and higher lows. That pattern is threatening to change.

Last week the dollar closed below both the 10 day MA and 50 day MA and has since been finding support at the 98 level — until Wednesday. The dollar broke below the 98 level on Wednesday to signal the daily cycle decline.   The dollar did not deliver bearish follow through. Instead the dollar rallied on Thursday to close back above the 50 day MA.  But the dollar went on to close back below the 50 day MA on  Friday.  

The dollar is still in a daily uptrend. A swing low with a close back up above the converging 50 day MA and the 10 day MA would indicate a continuation of its daily uptrend and signal a cycle band buy signal. A break above 98.32 would form a swing low. Under this scenario we would then label day 15 as an early DCL. 

However, the current peak on day 6 indicates a left translated daily cycle formation. A break below the day 15 low of 97.63 would extend the daily cycle decline. Under this second scenario we would be watching for a break below the previous DCL of 97.11 to form a failed daily cycle.