The current daily cycle peaked on day 6 and formed a swing high on Friday day 7. That is in line with our expectation to see a left translated cycle form here.
The dollar’s previous daily cycle peaked on day 8 and formed a daily cycle low on day 16. Wednesday saw the dollar break above the declining trend line to confirm a new daily cycle. Keep in mind that this weekly cycle is in the timing band for a weekly cycle low. We need to see a failed daily cycle to mark the weekly cycle decline. Failed daily cycles often times peak on or before day 8.
A loss of support at the 85.50 level will signal the daily cycle decline. A break below the (black) trend line confirms the daily cycle decline.
Stocks delivered a declining trend line break this week confirming a new daily cycle.
Stocks tested the declining trend line on Tuesday, then struggled with it on Wednesday. Thursday saw stocks break above the declining trend line in a clear and convincing fashion and Friday saw more bullish follow through.
Friday was day 7 and stocks have confirmed a new daily cycle. Backing out our view of the daily chart we can see that stocks are currently at resistance at the convergence of the extended trend line and the 50 day MA. If stocks are rejected here, then we could seen another 6 to 7 weeks of downside. But if stocks can break through here, then this could indicate a new yearly cycle has begun.
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