Cycle Trading: Dollar at new closing high

Last Thursday we discussed how the dollar being rejected by the 50 day MA and also losing the 10 day MA was a textbook set up for a decline into a daily cycle low. The dollar rallied on Friday and Tuesday to reverse that set up.

Thursday was day 10 for the dollar's daily cycle. Since it was too early for a daily cycle low we will label it a half cycle low, which makes Tuesday day 12. As long as Day 9 remains as the daily cycle peak then this daily cycle favors a left translated cycle formation. Tuesday saw the dollar close to a new closing high for the current daily cycle. If the dollar breaks to new highs going forward, then that will shift the odds towards a right translated cycle formation. A right translated daily cycle formation would have implications on the intermediate cycle.

The dollar printed a failed daily cycle during its recent daily cycle low. That confirmed the intermediate cycle decline. The dollar is currently testing the declining weekly trend line. So a break to a new daily cycle high would shift the odds towards a right translated daily cycle formation, which is a signal that a new intermediate cycle has begun. It would also cause a break of the declining weekly trend line, which is another signal that week 24 hosted the intermediate cycle low.

Gold has been holding up well in the face of the rallying dollar.

Tuesday was day 16 for the daily gold cycle. Despite the dollar closing at a new daily cycle high, gold has not breached its daily cycle trend line. However, if gold does breach the daily cycle trend line that will signal that gold has begun its daily cycle decline. And with the peak being on day 8, a break lower here would lock in a left translated daily cycle formation.