Cycle Trading

Summary

• The Dollar formed a swing high after stalling at 50 day moving average resistance on day 18.
• The Dollar remains in a daily downtrend; a close below the 10 day moving average would trigger a cycle band sell signal.
• The Miners broke bullishly out of consolidation, confirming continuation of their daily uptrend and signaling a cycle band buy signal.
• Dollar weakness would align with and potentially fuel further strength in the Miners.

The Dollar ran into resistance at the 50 day moving average on Friday, day 18 of its daily cycle. On Monday, it formed a swing high — a development that allowed the 10 day moving average time to catch up to price.

While the recent bounce helped relieve short-term oversold conditions, the Dollar remains in a daily downtrend. The key technical level to watch now is the 10 day moving average. A close back below the 10 day moving average would indicate a continuation of the daily cycle decline and trigger a cycle band sell signal. In other words, the Dollar is at risk of rolling over from resistance. Interestingly, the Miners are already moving in the opposite direction.

The Miners broke bullishly out of consolidation on Monday. That breakout confirms continuation of the daily uptrend and signals a cycle band buy signal. Strength emerging in the Miners while the Dollar stalls at resistance creates a constructive inter-market setup for the precious metals complex.

If the Dollar resumes its daily downtrend, it would reinforce the bullish breakout in the Miners and likely provide additional tailwinds to gold-related assets.

Takeaway

The Dollar is stalling at 50 day moving average resistance within a daily downtrend, while the Miners have already broken higher. A close below the 10 day moving average would confirm renewed Dollar weakness and support continued strength in the precious metals space.