Cycle Trading

Summary

• The Dollar printed its lowest point on week 19, placing it in its timing band for an Intermediate Cycle Low (ICL).
• The Dollar has broken above the 10 week moving average and turned it higher, signaling a potential shift in momentum.
• If the Dollar closes above the upper weekly cycle band, it would signal the Yearly Cycle Low and begin a new weekly uptrend.

The Dollar printed its lowest point on week 19, placing it in its timing band for an Intermediate Cycle Low (ICL).

The Dollar had been consolidating below the 10 week moving average for several weeks — until this week. The Dollar has now broken above the 10 week moving average, turning it higher, and is also in the process of pushing above the 50 week moving average.

Barring some type of sharp reversal into the weekly close, the Dollar should finish the week above the 10 week moving average, which would allow us to label week 19 as the Intermediate Cycle Low. That would make the current advance week 5 of the new intermediate cycle.

The decline into the week 19 ICL caused the 50 week moving average to fall sharply. Because of this, the Dollar will likely need to consolidate in the near term in order to allow the 50 week moving average time to flatten out before it can begin turning higher.

Despite the recent strength, the Dollar technically remains in a weekly downtrend. A close above the upper weekly cycle band is needed to end the weekly downtrend and begin a new weekly uptrend. Importantly, a close above the upper weekly cycle band would also signal that the Yearly Cycle Low has been set, marking a much larger cyclical shift for the Dollar.

Takeaway

The Dollar appears to be emerging from a week 19 Intermediate Cycle Low, suggesting a new intermediate cycle is underway. However, confirmation of a larger trend shift still requires a close above the upper weekly cycle band, which would signal the Yearly Cycle Low is in place.