Cycle Trading

Summary

• Daily: Break above 97.99 shifts odds toward right-translated cycle; still in daily downtrend unless price closes above the upper daily cycle band
• Resistance: Testing the 50 day moving average while stretched above the 10 day moving average
• Takeaway: Momentum has improved, but trend confirmation requires a break above the upper cycle band

Last week, the Dollar closed below the 10 day moving average on Monday and continued to grind lower into Tuesday, reinforcing the weakness outlined in the prior post, Dollar at a Decision Point — Breakdown Would Favor Risk.

However, instead of breaking down further, the Dollar reversed course. It reclaimed the 10 day moving average on Tuesday and delivered bullish follow-through on both Tuesday and Wednesday. More importantly, the Dollar broke above the day 7 high at 97.99 on Wednesday. That move shifts the odds toward a right-translated daily cycle formation, signaling improving internal strength.

That said, price is now stretched above the 10 day moving average and running into resistance at the 50 day moving average. This positioning suggests the Dollar may need to consolidate to allow the 10 day moving average time to catch up to price before attempting another advance.

Despite the recent strength, the Dollar remains in a daily downtrend. It will remain in that downtrend unless it closes above the upper daily cycle band, which would signal a confirmed shift in trend structure.

Takeaway

The Dollar has regained short-term momentum and improved its cycle structure, but it remains below key trend confirmation levels. A close above the upper daily cycle band is needed to officially end the daily downtrend.