Cycle Trading: The Weekend Report Preview

The Dollar

The dollar printed a bearish reversal on Friday, setting up a potential move down into a daily cycle low.

Friday was day 20 for the dollar's daily cycle, placing the dollar in its timing band for seeking a daily cycle low.  A swing high and a break below the daily cycle trend line will confirm the daily cycle decline. A break below 93.60 will form a daily swing high.   The dollar continues to close above the upper daily cycle band, indicating a daily uptrend.  The dollar will remain in its daily uptrend until it closes below the lower daily cycle band.

The dollar formed a weekly swing low & closed above the 10 week MA last week.   The dollar then delivered bullish follow through this week by closing above the lower weekly cycle band to confirm that week 31 hosted the ICL.  Still, the dollar is in a weekly downtrend and will remain so until it can close 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 October, 2017 month 17 for the new 3 year cycle.

September was month 16, placing the dollar deep in its timing band to form a yearly cycle low. The dollar has formed a monthly swing low in October to signal a new yearly cycle.  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.

The dollar has broke below the previous 3 year cycle low in September to form a failed 3 year cycle.  The remaining yearly cycles should now form as left translated yearly cycles until the next 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, which the dollar replicated.

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

Thursday's new high on day 31 locks in a right translated daily cycle formation.  

Friday was day 32 for the daily equity cycle, placing stocks in their timing band for seeking out a daily cycle low. A swing high and trend line break will confirm the daily cycle decline.  A break below 2540.02 would form a daily swing high.  Stocks continue to close above the upper daily cycle band, indicating a daily uptrend.  Stocks will remain in its daily uptrend until it closes below the lower daily cycle band.

This is week 6 for the new intermediate cycle. Stocks continue to close above the upper weekly cycle band indicating a weekly uptrend.  They will remain in their uptrend until they close below the lower weekly cycle band.

Stocks broke out to another new high in October 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 October, the earliest a monthly swing high can form will be in November.  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.