Cycle Trading

Pre-Summary

The dollar extended its daily cycle decline into Day 26, placing it in its timing band for a DCL. After breaking below the 200-day MA without delivering bearish follow-through, signs of a potential cycle turn are beginning to emerge.

The dollar broke below the Day 17 low on Monday to extend the daily cycle decline. While the dollar formed a swing low on Tuesday, it was rejected by the 10-day MA, then closed lower on Wednesday and broke lower again on Thursday.

Thursday is Day 26, placing the dollar in its timing band for a DCL. The dollar also became stretched below the 10-day MA as the decline extended. However, after breaking below the 200-day MA, the dollar did not deliver bearish follow-through. Instead, the dollar is in the process of forming a bullish reversal on Thursday. If the reversal holds, it will ease the parameters for forming a swing low.

Reclaiming the 200-day MA would provide additional evidence that a cycle low is developing. A swing low and close above the 10-day MA will allow us to label Day 26 as the DCL. The dollar is currently in a daily downtrend. The dollar will remain in its daily downtrend unless it closes above the upper daily cycle band.

Current Framework

Trend: Daily downtrend.

Cycle: Day 26; in the timing band for a DCL, with signs of a potential cycle turn beginning to emerge.

Next Trigger: Reclaiming the 200-day MA provides additional evidence that a cycle low is developing. A swing low and close above the 10-day MA will label Day 26 as the DCL.