Cycle Trading: The Weekend Report Preview

The Dollar

The dollar printed it lowest point on Fri, placing it in its timing band for a DCL. However the dollar failed this week to break above the declining trend line to confirm a new daily cycle.

The status of the dollar's daily cycle is unclear. Friday was either day 5 or day 31. The dollar needs to break above the declining trend line to confirm the new daily cycle, which would make Friday day 5. Unless that happens that means that the daily cycle is still declining into its daily cycle low making Friday day 31.

What is clear is that the dollar continues to close below the lower daily cycle band indicating a daily downtrend. It will remain in its downtrend until it can close above the upper daily cycle band.

The dollar printed its lowest point on week 31, placing it late in its timing band to form an ICL. A weekly swing low and a break above the declining 10 week MA will confirm the new intermediate cycle. A break above 92.69 will form a weekly swing low. The dollar is in a weekly downtrend and will continue in its weekly downtrend until it closes above the upper weekly cycle band.

The dollar printed a failed yearly cycle low in May, 2016 to confirm the 3 year cycle decline. Then the dollar went on to printed a higher monthly high. Since a cycle cannot fail and then print a higher high, this confirms that May, 2016 was an early 3 year cycle low. That makes September, 2017 month 16 for the new 3 year cycle.

16 months places the dollar deep in its timing band to form a yearly cycle low. Since the dollar printed a lower monthly low in September the earliest a monthly swing low can form will be in October. The dollar has begun to close below the lower monthly cycle band indicating a monthly downtrend. The dollar will remain in its monthly downtrend until it can close back above the upper monthly cycle band.

Now the dollar has broke below the previous 3 year cycle low. This forms a failed 3 year cycle. The remaining yearly cycles should now form as left translated yearly cycles until the 3 year cycle low forms. And with confirmation of a failed 3 year cycle, this sets up as a left translated 3 year cycle. That aligns with our 15 year super cycle analysis.

The dollar cycles through a 15 year super cycle. Each 15 year super cycle is embedded with five 3 year cycles. The dollar’s last 15 year super cycle peaked in 2001 on month 106, then declined into its third 3 year cycle low. The topping pattern in 2001 is vary similar to the current set up. The confirmation of a failed 3 year cycle confirms that the dollar has begun its 15 year super cycle decline. Once the dollar began its 15 year super cycle decline back in 2002 there was a rapid decline to the 50 month MA, as the dollar is currently doing.

May, 2016 hosted the 3 year cycle low, which was a shortened 3 year cycle of only 24 months. Since most times cycle balances themselves out, the dollar is positioned for the current 3 year cycle to be a stretched 3 year cycle to coincide with the start of the 15 year super cycle decline. And a stretched 3 year dollar cycle decline aligns with gold beginning a new multi year bull cycle.

Stocks

The new high on Friday, day 18, is shifting the odds towards a right translated daily cycle formation.

While stocks did not form a failed daily cycle as it printed the 8/21 low, all other evidence is indicating that the intermediate low has been set. Stocks are closing above the upper daily cycle band confirming the daily uptrend. They will continue in its daily uptrend unless they close back below the lower daily cycle band.

Evidence of of an intermediate cycle low:

• Weekly trend line break and decline.

• Weekly swing low.

• Oversold weekly RSI and recovery.

• Closed back above the 10 week MA.

• Closed back above the upper weekly cycle band.

• Bullish Zero Line Crossover on Weekly TSI.

• Breaking out to a new high

Stocks continue to be in a weekly uptrend and will remain so until they close below the lower weekly cycle band.

Stocks broke out to a new high in September locking in a right translated yearly cycle formation. Stocks are deep in their timing band for seeking out their yearly cycle low. Since stocks printed a new high in September, the earliest a monthly swing high can form will be in October. A monthly swing high accompanied by a break of the monthly trend line will confirm the yearly cycle decline. With every indication that a new intermediate cycle has just begun, the earliest a yearly cycle low can form would be at the next intermediate cycle low, which will extend the yearly cycle by another 4 - 6 months.