Cycle Trading

Summary

• Dollar printed lowest point Tuesday, day 22 → early DCL timing band
• Closed above the 10 day MA Friday → label day 22 as DCL
• Dollar should turn the 10 day MA higher as it rallies
• Major resistance ahead: converging 50 day MA / 200 day MA
• Dollar remains in a daily downtrend unless it closes above upper daily cycle band

The dollar printed its lowest point on Tuesday, day 22, which places it in the early portion of its timing band for a DCL. The dollar formed a swing low on Wednesday then closed above the 10 day moving average on Friday, so we will label day 22 as the DCL.

From here, the dollar should turn the 10 day moving average higher as it rallies out of its DCL. However, the dollar will likely run into resistance at the converging 50 day moving average and 200 day moving average.

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.

This bounce out of the DCL is constructive, but the reaction at those converging moving averages will determine whether this rally attempt reverses lower and maintains the downtrend — or begins a trend transition.