Cycle Trading: Weekend Report Preview

The Dollar

Boom - the dollar closed below the 50 day MA on Friday.  

Friday was day 20 for the daily dollar cycle, placing the dollar in the early part of its timing band for a daily cycle low.  This is the first time that the dollar closed below the 50 day MA since it regained the 50 day MA back in July.  The dollar also closed below the lower daily cycle band.  Taken together they indicate that the dollar is not only in its daily cycle decline, but the intermediate cycle decline has also begun. 

Week 10 remains as the intermediate cycle high.  This is week 15 for the intermediate cycle.  The dollar formed a bearish weekly reversal that closed below the 10 week MA and the weekly line to confirm the intermediate cycle decline.  The dollar currently is in a weekly uptrend.  The dollar will continue in its weekly uptrend unless it closes below the lower weekly cycle band. 

The dollar printed a new high in September, which was month 19 for the yearly dollar cycle   The dollar's yearly cycle normally averages 9.7 months.  But this is the second consecutive year of an extended yearly cycle. 19 months places the dollar very late in its timing band for a yearly cycle decline.  A monthly swing high is required for a yearly cycle decline.  A break blow 97.56 will form a monthly swing high. The dollar currently is in a monthly uptrend.  It will remain in its monthly uptrend unless it closes below the lower monthly cycle band.

 

Stocks

Stocks printed its lowest point on day 42, which placed them in their timing band for a daily cycle low. 

Stocks closed above the 10 day MA and the 50 day MA on Thursday.  Then delivered bullish follow through by closing above the declining trend line on Friday to confirm Friday as day 6 of the new daily cycle.  Stocks are currently in a daily downtrend.  They will remain so unless they close above the upper daily cycle band. 

Stocks formed a weekly swing low this past week.  

The previous week was week 17 for the weekly stock cycle, placing stocks in the early part of its timing band for an intermediate cycle low.  The peak on week 7 indicates a left translated weekly cycle formation, setting up the expectation to see stocks break below the week 9 low in order to complete its intermediate cycle decline.  However, stocks have been forming a weekly triangle consolidation.   Normally the cycle low is the lowest point following the cycle peak.  With stocks forming a weekly triangle consolidation, that can obscure our weekly cycle counts and cause an ICL to form above the cycle low.  So we need to see stocks break from this weekly consolidation. A break below the lower stem would indicate a continuation into the ICL.  But a break above the declining weekly trend line (upper stem) would force us to label week 17 as the ICL.  And the weekly swing low has set the stage for a possible bullish break of the weekly consolidation.  Currently, stocks are in a weekly uptrend.   They will remain in its weekly uptrend unless it closes below the lower weekly cycle band.