Cycle Trading

Summary

• The dollar broke bullishly out of consolidation on Friday.
• The breakout occurred on day 33, placing the dollar in its timing band for a daily cycle low.
• The weekly chart has already confirmed a new weekly uptrend.
• The monthly chart suggests the yearly cycle low may already be in place.
• Longer-term cycles also point to the possibility that the 3-year cycle low has formed.

The dollar had been consolidating below the 99.75 level for several weeks. That changed on Friday as the dollar broke bullishly out of consolidation. Friday marked day 33 of the current daily cycle, placing the dollar in its timing band for a Daily Cycle Low. The dollar is now getting stretched above the 10 day moving average and may need to consolidate to allow the moving average to catch up to price.

It is also possible that Tuesday’s low on day 30 marked a very shallow daily cycle low, which would make Friday day 3 of a new daily cycle. What is clear is that the dollar is currently in a daily uptrend. Breaking bullishly out of consolidation indicates a continuation of the daily uptrend and triggers a cycle band buy signal.

The weekly and monthly cycle structure behind this move is discussed in detail in The Weekend Report.

Cycle Alignment

Daily and weekly cycles are bullish while the monthly cycle is attempting to turn higher.