The dollar began its recent daily cycle decline at the end of January and continued through Wednesday. Along the way the dollar broke below the previous daily cycle low, forming a failed daily cycle. A failed daily cycle signals an intermediate cycle decline.
A swing low and declining trend line break formed on Thursday to confirm a new daily cycle. So there is a possibility that a new intermediate has just begun.
Our framework has the dollar declining into a three year cycle low. Another left translated failed daily cycle here would fit into that framework. Therefore we should see this new daily cycle roll over by day 8. Should the dollar rally past day 8, then the odds would shift to this being the first daily cycle of a new intermediate cycle.
Another reason why I think that this daily cycle is a continuation of the current intermediate cycle is that this does not “look” like the dollar is rallying into a new intermediate cycle. The dollar tends to rally out of an intermediate low in an impulsive fashion.
I was curious if I could quantify that. So I looked at the rate of of how quickly the dollar has risen from Wednesday’s low. The dollar rose 0.49 cents from the bottom. Which breaks down to a rise of 0.1633 cents per day. In the full Weekend Report I detail my findings.
Stocks
After an impressive nine day rally out of the early February low stocks have stalled at the 1850 resistance zone.
Currently, this daily cycle has a day 9 peak with Friday being day 11. There is a bearish divergence developing on the True Strength Indicator which suggests that stocks are losing their momentum. Stocks could drop into an early half-cycle low here. Because stocks just left behind a right translated intermediate cycle, which we will look at in the next chart, our expectation is to see stocks go on the print a higher daily cycle high.
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