Cycle Trading

Pre-Summary

Saturday we noted that the Dollar had been consolidating below the 10-day moving average while holding above the 100.56 support level. Monday’s breakout above the 10-day moving average and the declining trend line provided the evidence needed to signal the Daily Cycle Low. An equally important lesson is how the Daily Cycle Low migrated from Day 25 to Day 31 as the consolidation unfolded.

Saturday’s report highlighted the Dollar as it continued to consolidate beneath the 10-day moving average while holding above the 100.56 support level. That consolidation resolved to the upside on Monday as the Dollar broke above both the 10-day moving average and the declining trend line.

This signals a continuation of the daily uptrend and a cycle band buy signal.

As discussed in Saturday’s report, the Dollar printed its lowest point on Day 25. Under normal circumstances, the Daily Cycle Low is established at the lowest point following the cycle peak. However, triangle consolidations can produce a different outcome.

Rather than forming at the initial low, the Daily Cycle Low can migrate toward the apex of the consolidation as price continues to build a base. — That appears to be the case here.

Friday’s bullish reversal on Day 31, followed by Monday’s breakout, provides the evidence needed to label Day 31 as the Daily Cycle Low.

Dollar Cycle Study

✓ Previous Update: Dollar held support at 100.56 while consolidating beneath the 10-day moving average.

✓ Saturday: Triangle consolidation continued, with Day 31 developing as a potential Daily Cycle Low.

✓ This Week: Breakout above the 10-day moving average and declining trend line signaled Day 31 as the Daily Cycle Low.

Next Milestone: Holding above the 10-day moving average favors continuation of the daily uptrend.