Cycle Trading: Weekend Report Preview

The Dollar

The dollar undercut the day 49 low, extending the daily cycle out to day 54.  The dollar formed a daily swing low on Thursday indicating that day 54 hosted the DCL.

54 days places the dollar very deep in its timing band for a daily cycle low.  Still, the dollar needs to break above the declining trend line to confirm the new daily cycle.  The dollar has been closing below the lower daily cycle band indicating a daily downtrend.  The dollar will remain in its daily downtrend until it closes above the upper daily cycle band.

The dollar is in a daily downtrend & will continue in its downtrend until it can close above the upper daily cycle band.

The dollar printed its lowest point following the week 4 peak.  19 weeks places the dollar in its timing band for an ICL.  If Wednesday is confirmed as the daily cycle low then that will also signal a new weekly cycle.  A break above 97.30 forms a weekly swing low.  Then a break above the declining weekly trend line will confirm the new intermediate cycle.  The dollar is in a weekly downtrend & will continue in its downtrend until it can close above the upper daily cycle band.

The dollar has already printed a lower monthly low. June is month 13, placing the dollar in its timing band to print a yearly cycle low. The narrow range monthly candle eases the parameters for forming a monthly swing low.  Since the dollar has printed a lower monthly low in June, the earliest a monthly swing low can now form will be in July.

The dollar printed a failed yearly cycle 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 June, 2017 month 13 for the new 3 year cycle. The dollar has now broke convincingly below the 3 year trend line, indicating that start of the 3 year cycle decline. If that is the case then the subsequent yearly cycles should form as left translated yearly cycles until the 3 year cycle low forms. And if the 3 year cycle decline has begun, then it is setting 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. There are some similarities developing to the current set up. Currently, the dollar has printed a new high in January, which is month 105 for the 15 year super cycle. Which is about when the previous super cycle rolled over into its 15 year super cycle decline. At the previous super cycle peak the dollar was quite stretched above the 200 month MA as well as the 50 month MA — as it is right now. There are bearish divergences developing on the momentum indicators that also appeared at the previous 15 year super cycle peak.

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, we could be poised for the next 3 year cycle to be a stretched 3 year cycle just as the dollar is ready to begin its 15 year super cycle decline. And a stretched 3 year dollar cycle decline would align with gold beginning a new multi year bull cycle.

Stocks

Day 15 remains as the daily cycle high keeping alive the possibility of a left translated daily cycle formation.

Stocks have been consolidating in a narrow range for the past two plus weeks.  The bearish divergence developing on the momentum oscillators indicate a bearish resolution to the consolidation.   A break below the day 15 low of 2415.70 will form a daily swing high and indicating a left translated cycle formation.  Stocks remain in a daily uptrend and will continue in its uptrend unless it closes below the lower daily cycle band.

This is week 32 for the intermediate equity cycle.  A possible left translated daily cycle formation aligns with stocks being late in their timing band for an intermediate cycle decline.  A weekly swing high & a break below the weekly trend line will confirm the intermediate cycle decline.  A break below 2415.70 will form a weekly swing high.

Stocks are in a weekly uptrend.  They will remain in their weekly uptrend unless they close below the lower weekly cycle band.

May is month 16 for the yearly equity cycle. The new high locks in a right translated yearly cycle formation. Stocks are deep in their timing band for seeking out their yearly cycle low. A monthly swing high accompanied by a break of the monthly trend line will confirm the yearly cycle decline.   Since stocks printed a higher high in June, the earliest a monthly swing high can form will be in July.