Last week the dollar printed it lowest point since the week 2 peak. This week the dollar formed a swing low off the week 20 low. The swing low also broke above the declining trend line confirming a new intermediate cycle.
Friday was day 6 for the new daily cycle. After the explosive start the dollar appears to be consolidating below the 50 MA. We could see the dollar crawl along the 50, which is usually a continuation pattern. The daily cycle is still young and we should see the dollar break above the 50 MA and go on to test the 200 MA. Should the dollar regain the 200 MA, that would be another signal that a three year cycle low has been left behind.
The daily equity cycle peaked on day 21 and then declined into a low on day 26. Friday saw stocks break above the day 21 peak to a new daily cycle high.
The daily equity cycle typically prints a low every 30 – 45 days. In order to convince me that day 26 was a right translated daily cycle low I would like to see stocks break out to a new high. They did that on Friday but not in a clear and convincing manner. The big volume on the bearish reversal also signals a false breakout.
Friday could be day 5 of a new daily cycle or day 31. If Friday was a false break out and stocks go on to break below the mini triangle consolidation then we will label Friday day 31. And then look for a daily cycle low to print below the day 26 low of 1839.57.
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