Cycle Trading

Summary

• U.S. air strikes on Iran triggered a sharp Dollar spike.
• The Dollar broke above both its 50 day and 200 day moving averages.
• Stocks opened sharply lower but found support at 6800 and closed higher.
• The Dollar’s new high on day 24 locks in a right-translated daily cycle.
• Odds increase that the Dollar is now in week 5 of a new intermediate cycle.

U.S. air strikes on Iran over the weekend injected immediate volatility into global markets. The initial reaction was a sharp rally in the U.S. Dollar. The Dollar surged higher on Monday, breaking above both its 50 day and 200 day moving averages in a single move. That breakout is technically significant.

The new high on day 24 locks in a right-translated daily cycle formation. Right-translated cycles reflect underlying strength and typically mark the early stages of a larger advance. This development materially shifts the technical posture of the Dollar and increases the probability that it is now in week 5 of a new intermediate cycle. That matters. A strengthening Dollar often creates pressure across risk assets.

Stocks opened sharply lower on Monday in response to the Dollar spike. However, price found support at the 6800 level — a level we have been watching closely — and equities managed to close higher on the day. Despite the rebound, stocks remain contained by the 10 day moving average. That leaves the status of the daily equity cycle uncertain. The market avoided immediate breakdown, but it has not yet reclaimed short-term momentum.

We now have a developing tug-of-war:

• A Dollar potentially beginning a new intermediate advance.
• Equities attempting to stabilize at key support.
• Geopolitical tension acting as the catalyst.

If the Dollar continues higher and confirms a new intermediate cycle, it would increase headwinds for stocks and commodities. However, if equities can reclaim the 10 day moving average and push higher despite Dollar strength, that would signal resilience and potentially delay a broader cycle decline.

For now, the clearer technical development is the Dollar breakout.

What to Watch Next

Dollar

• Follow-through above the 200 day moving average would reinforce intermediate cycle strength.
• Any failure back below the 50 day moving average would negate the breakout.

Stocks

• Holding above 6800 keeps near-term structure intact.
• A close back above the 10 day moving average would improve daily cycle odds.
• A break below 6800 would signal that the daily cycle decline is asserting itself.

Takeaway

The geopolitical catalyst has shifted momentum back toward the Dollar. With a right-translated daily cycle now locked in, the odds favor that a new intermediate advance is underway. Stocks showed resilience at 6800, but unless they reclaim short-term resistance, the balance of risk has tilted toward Dollar strength creating pressure on risk assets.