Potential Dollar Rally

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Wednesday was day 18 and the dollar printed another lower low. However the dollar reversed and closed near the highs of the day. This has eased the parameters for forming a swing low.

DXY00 Commodity Futures Price Chart for U S D

At 18 days, the dollar has now entered its timing band to print a daily cycle low. A break above 80.235 forms a swing low. And a declining trend line break will confirm a new daily cycle.

Will a new daily cycle usher in a new intermediate cycle as well?

dxy weekly

The weekly dollar cycle peaked on week 2. A peak on week 2 forms an extremely left translated weekly cycle. Extremely left translated cycles have a high tendency of failing.

There will be two things that we are monitoring once the dollar confirms new daily cycle. The first thing is the daily cycle count of the new daily cycle. If the dollar is still in an intermediate cycle decline then the impending daily cycle should form in a left translated manner peaking on or before day 8. On the weekly chart, we will need to keep an eye on the weekly cycle trend line. If the dollar is to continue into an intermediate cycle decline then it should not regain the lost weekly trend line.

Stocks took it on the chin in the face of the rallying dollar.

$ SPX Sharp Charts Workbench Stock Charts com 2

Wednesday was day 9 for the daily equity cycle. Stocks printed a higher high before reversing lower. Now if stocks did print an intermediate cycle low on February 5th then our expectation is to see this new intermediate cycle break to new highs because the previous weekly cycle formed in a right translated manner. Therefore I would look for a short pullback before continuing higher. The gap left behind at the 1753 level could possibly get filled here. If something more sinister is afoot, then a break below the freshly printed daily low of 1737.92 would signal a failed daily cycle.

The Miners formed a swing high high today.

GDX Sharp Charts Workbench Stock Charts com 20

Wednesday was day 15 for the daily Miner cycle. The Miners appear to be rolling over into a daily cycle decline. A break of the blue trend line confirms a daily cycle decline. If this daily cycle is destined to form in a right translated manner then a reversal of the breakout area could signal a new daily cycle.


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