Cycle Trading

Pre-Summary

• DCL confirmed but rally stalled at resistance
• Rejection at 50 day MA shifts pressure lower
• Loss of 200 day MA weakens structure
• Downtrend attempting to reassert

The dollar confirmed a daily cycle low on day 58 after forming a swing low and closing above both the 10 day and 200 day moving averages earlier in the week. However, that strength was short-lived as price ran into resistance at the 50 day moving average and reversed lower into Friday.

From a cycle perspective, this rejection at the 50 day moving average disrupts the initial recovery attempt and places the focus back on the broader daily downtrend. The move back below the 200 day moving average reinforces the weakness in the current structure.

The sequence of events leaves the cycle structure somewhat uncertain, as the confirmed DCL is now being challenged by immediate downside pressure. What is clear is that the rally failed to build follow-through, keeping the burden of proof on the bulls.

However, the cycle is still early following the day 58 low, and confirmation of continued downside will be needed. If the dollar continues lower and closes below the 10 day moving average, then it would indicate a continuation of the daily downtrend and signal a cycle band sell condition. If instead the dollar can reclaim the 200 day moving average, then the current move would begin to stabilize, with the 50 day moving average remaining as the next resistance level.

Cycle Alignment

Daily downtrend within broader mixed structure