The dollar has signaled a new daily cycle, but its ability to sustain the advance is already being tested.
In recent posts, we discussed the dollar’s resilience as it approached its timing band for a daily cycle low (DCL). The dollar subsequently formed a swing low, providing the first evidence that its daily cycle decline may have ended.
The next requirement was a close above the 10 day MA. That signal arrived on Monday, followed by another advance on Tuesday, allowing us to label day 31 as the DCL. However, the dollar encountered resistance at 102.50 and formed a swing high on Thursday, day 4. The dollar is now challenging the 10 day MA. A close below the 10 day MA would raise the possibility that the new daily cycle is developing a left-translated structure. That would be a significant departure from the bullish continuation scenario. A new daily cycle that peaks this early would raise questions about the strength of the advance. For now, the dollar remains in a daily uptrend. The next price development will help determine whether the dollar can resume its advance or whether the new cycle is already beginning to weaken.
The potential implications for the intermediate and yearly cycles will be discussed in the Weekend Report.
Leave a Reply