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Independent Analyst
The Dollar
The dollar printed a bearish reversal on Friday.
The big picture is that the dollar is very late in its timing band for a yearly cycle decline and formed a bearish weekly reversal on week 5 to set up a potential left translated weekly cycle formation. A left translated daily cycle formation would align with the dollar declining into an intermediate cycle low. The bearish reversal on day 8 sets the dollar up for a potential left translated daily cycle formation. Still, the dollar is in a daily uptrend. The dollar will remain in its daily uptrend unless it closes below the lower daily cycle band.
The peak on week 5 aligns with a left translated weekly cycle formation. The dollar formed a weekly swings low this week which allows us to construct the weekly trend line. A break below the weekly trend line will confirm the intermediate cycle decline. So if the dollar has begun its intermediate cycle decline, then a bearish reversal on day 8 aligns with an intermediate cycle decline. However, 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.
Stocks
Stocks could not break above the 50 day MA and broke lower to back test the day 44 low.
Stocks backtested the day 44 low on Thursday. Stocks went on to form a swing low and closed above the 10 day MA on Friday. Therefore we will label day 44 as the daily cycle low, making Friday day 9 for the new daily cycle. Stocks have begun to close below the lower daily cycle band indicating a daily downtrend. Stocks will remain in their daily downtrend unless they can close back above the upper daily cycle band. And a daily downtrend is associated with being in an intermediate cycle decline.
This was week 10 the intermediate cycle. The peak on week 7 followed by closing below the 10 week MA indicates that stocks are in an intermediate cycle decline. However, stocks are caught between the 10 week MA and the 50 week MA. Unless there is some type of major intervention from the Fed, stocks will likely continue their intermediate cycle decline. Stocks will need to either close above the 10 week MA or below the 50 week MA in order for a trending move to develop. Currently, stocks are in a weekly uptrend. If a weekly swing low forms above the lower weekly cycle band then stocks remain in their weekly uptrend.
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