Cycle Trading: Weekend report preview

LikesMoney Independent Analyst

The Dollar

The dollar formed a swing low on Friday.

The dollar broke below the day 32 low on Thursday to extend its daily cycle decline. Thursday was day 34, placing the deep in its timing band for a DCL. The dollar formed a swing low on Friday that closed above the 50 day MA, 10 day MA and the declining trend line to confirm the new daily cycle. The dollar is currently in a daily downtrend. But a close above the upper daily cycle band will end the daily downtrend and begin a daily uptrend.

Stocks

Stocks closed below the daily cycle trend line on Friday.

Stocks are showing signs of a change of character. Stocks have been in a strong uptrend that has been characterized by RSI 05 forming quick bullish reversals once oversold and then embedding in overbought. Tuesday’s bullish reversal followed by Wednesday’s bullish follow through did not even see RSI 05 reach overbought. Stocks were rejected by the declining trend line on Thursday then closed below the daily cycle trend line on Friday to signal the daily cycle decline. Any bearish follow through will send stocks to seek out their DCL. And with a peak on day 11, any bearish follow through will left translate this daily cycle to also lead to an intermediate cycle decline.

While stocks did close below the daily cycle trend line, they did not close below the 50 day MA. This is the last area for defense. If the Fed decides to intervene, a swing low here would have us label day 19 as a half cycle low. Stocks are still in a daily uptrend. If a swing low forms above the lower daily cycle band then stocks will remain in their daily uptrend and trigger a cycle band buy signal.

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LikesMoney

Independent Analyst

Assets (such as stocks, gold, and the dollar) have identifiable cycles.

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