Cycle Trading: Weekend report preview
|The Dollar
The dollar delivered a bullish surprise on Wednesday.
Prior to Wednesday the dollar had been in a daily downtrend characterized by highs forming below the upper daily cycle band and lows forming below the lower daily cycle band. The dollar delivered a bullish surprise on Wednesday by closing convincingly above the 50 day MA and the upper daily cycle band. Closing above the upper daily cycle band ends the daily downtrend and begins a new daily uptrend. Then the dollar delivered bullish follow through on Thursday by closing convincingly above the 200 day MA. And then higher again on Friday. This breaks the pattern of lower highs and beings a pattern of higher highs.
Bullish surprises tend to happen during an intermediate cycle advance. All of this bullish action of the dollar confirms that the late May DCL was also the intermediate cycle low, which places the dollar on week 3 of the new intermediate cycle.
The dollar became rather stretched above the 10 day MA and the 50 day MA. The dollar could consolidate here and possibly crawl along the 200 day MA which would to allow the 10 day MA to catch up to price.
Stocks closed below the 10 day MA on Tuesday and the the 50 day MA on Friday to confirm the daily cycle decline.
Friday was day 26 for the daily equity cycle, which is still a bit early to expect a DCL. The peak on day 23 indicates a right translated daily cycle formation which aligns with stocks being in a daily uptrend. If stocks form a swing low above the lower daily cycle band that would signal a continuation of the daily uptrend and trigger a cycle band buy signal.
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